THE MOTOR INSURERS BUREAU IS AN EMANATION OF THE STATE AND LIABLE TO MAKE PAYMENT TO A PASSENGER

In Colley v Shuker & Ors [2020] EWHC 3433 (QB) Mr Justice Freedman held that the MIB was directly liable to compensate an injured passenger in circumstances where the passenger knew that a driver was not insured.

THE CASE

The claimant was seriously injured in a road traffic claim, he was rendered an incomplete tetraplegic.  The insurers of the vehicle obtained a court order avoiding the policy.  This meant that the insurer had no obligation to pay under s.151 of the Road Traffic Act 1980.

The claimant, a passenger in a car being driven by someone who the claimant knew did not have a valid driving licence and who was not insured to drive the vehicle, asserted that the MIB had a legal obligation to pay the damages.  The MIB scheme

THE CASE AGAINST THE MIB AND THE SECRETARY OF STATE FOR TRANSPORT

The insurer of the vehicle had obtained an order under Section 152(2) of the Road Traffic Act 1988 (which has subsequently been amended to prevent this happening, see  The Motor Vehicles (Compulsory Insurance) (Miscellaneous Amendments) Regulations 2019,).   The claimant could not enforce a claim against the insurer.

THE (OLD) SECTION 152 WAS INCOMPATIBLE WITH EUROPEAN LAW

1. For the moment, it suffices to say this. Despite the making of the declaration under section 152(2) of the Road Traffic Act 1988, it was submitted that this section was incompatible with the EU law Directive 2009/103 which required Member States to make provision for compensation to third party victims of motor vehicle accidents. The words of section 152(2) of the Road Traffic Act 1988 were clear and provided the Insurer with a complete defence and did not admit the exercise of any discretion. The consequence was that the UK Government had been rendered unable to fulfil its duty to make provision for compensation to third party victims of motor vehicle accident where a declaration was obtained under section 152(2). Any incompatibility between the section and the EU Directive could not be resolved by a purposive interpretation, giving rise to a direct claim to damages of the Claimant against it. The claim against the Insurer was not a direct claim, but a derivative claim under section 151 to satisfy any judgment obtained against the First Defendant. However, the Claimant did not have a directly enforceable right to claim damages against the Insurer, a private entity and not a direct emanation of a Member State. There was therefore no power of the Court to disapply section 152(2).

2. The claim against the MIB can be summarised at this stage as follows. By contrast with the position with his claim against the Insurer, it was submitted on behalf of the Claimant that the MIB is an emanation of the State. Further, it was submitted that the UK government had conferred on the MIB the task under the EU Directive to remedy its failure to implement its obligation under the EU Directive consequent upon the above incompatibility. Unlike in the case of the Insurer where there could be no direct claim, there was no impediment to the Claimant having directly effective rights against the MIB in the circumstances of this case. The precise nature of the claim against the MIB and of MIB’s defence to the claim will be set out in more detail below after setting out the nature of the structure of the EU Directive and the UK legislative position.

3. On 28 March 2010, the claim was amended to add as Fourth Defendant, the Secretary of State for Transport (‘the Secretary of State’). The claim against the Secretary of State is a “Francovich” claim (based on the case of Francovich v Italian Republic [1995] ICR 722), namely that if the Claimant has no remedy against the Second Defendant and the MIB, the Secretary of State has failed to implement the 2009 Directive and is therefore in breach of statutory duty under the European Communities Act 1972 which was a sufficiently serious breach of EU law to sound in damages. By para. 4 of an order made on 10 June 2020, the claim against the Secretary of State has been stayed pending the determination of the preliminary issue. The Secretary of State denies the claim for a number of reasons: in particular, he contends any breach was not sufficiently serious to give rise to a Francovich liability.

THE FINDINGS OF THE JUDGE

The judge held that the MIB was an emanation of the state:-

1.”The Claimant is able to rely upon Articles 3(1), 10 and 12 of Directive 2009/103/EC to require the MIB, an emanation of the State and compensation body for the purposes of Article 10, to pay compensation in the circumstances of the present case.”

2. “the exclusion in the second sub-paragraph of Article 10(2) could not apply in that the fact that the accident was caused by a person known not to be insured does not mean that the accident was caused by an uninsured vehicle.”

“In my judgment, the wording of the exclusion in the second sub-paragraph of Article 10(2) is a reference to the vehicle being uninsured and not to the driver being uninsured. That comes from the syntax of Article 10(2), which refers to the knowledge that “it” is uninsured. The word “it” in the context of the sentence means “the vehicle”, whereas the word “they” refers to the drivers. The exclusion is therefore where there is knowledge that the vehicle is uninsured rather than the driver not being a named or an insured driver.”

1. The UK Government has accepted that the regime of section 152(2) of the RTA 1988 constitutes a failure of the UK Government to institute in full a compulsory insurance regime (see Lewis, para. 74), that is to say one that guarantees compensation to passenger victims. The Secretary of State acknowledges this in his Defence in this action at para.6(b): see para. 156 above. The Claimant, being such a victim, has thus far gone unprotected by the UK regime, being unprotected by the RTA and unable to claim against the (private party) insurers (see Colley v Shuker [2020] RTR 13). The MIB has the task under Article 10 to remedy the failure of the Government to institute in full a compulsory insurance regime. The Claimant is entitled to invoke his directly effective Article 3, 10 and 12 rights in the circumstances of this case against the MIB as an emanation of the State which has the obligation to provide compensation in these circumstances: see Lewis especially at para. 72 and Farrell v Whitty (No.2) at para. 39. Further, for the reasons above set out, there is no defence available to the MIB under Article 10(2) of the Directive against the Claimant’s directly enforceable rights.