Vehicle accidents on private land and direct effect of EU law against the MIB (Motor Insurers’ Bureau v Lewis)

The judgment of the Court of Appeal (Henderson LJ, Flaux LJ and Sir Stephen Richards) is significant in two principal respects:

•  first, it re-confirms that victims of uninsured drivers on private land are individually entitled to the protection of Directive 2009/103/EC (the Motor Insurance Directive)

•  second, that they are entitled to claim directly against the Motor Insurers’ Board (MIB) as the relevant emanation of the state for this purpose

What was the background?

The claimant had been pursued along a public highway by the first defendant farmer in his uninsured 4x4 Nissan Terrano, then chased into a field (which was private land), where the claimant was run over and left with serious injury (tetraplegia, brain injury and reduction of life expectancy). The vehicle should have been, but was no longer insured, so the claimant turned to the second defendant, the MIB—a private body composed of the members of the UK motor insurance industry—which has liability for victims of uninsured drivers under the Uninsured Drivers’ Agreement (UDA) it made with the Secretary of State. It was common ground that the MIB is the body that has such liability where it arises under section 145 of the Road Traffic Act 1988 (RTA 1988 liability) and is also the body designated by the UK state as being responsible for the like liability under the Motor Insurance Directive. At least since the Court of Justice case of Vnuk v Zavarovalnica Triglav dd Case C-162/13, [2014] All ER (D) 121, it has however become clear that the RTA 1988 liability does not fully implement the EU insurance obligation, since it does not cover accidents on private land. The MIB denied liability for the claimant’s injuries on the basis that it argued that its liability under the UDA only extended to the RTA 1988 liability.

At first instance, the claimant argued that either the RTA 1988 liability had to be ‘read down’ to include private land or the EU obligation was directly effective against the MIB as an emanation of the state—all of which the MIB denied. Soole J found against the claimant on the former (reading down the statute) but in favour of the claimant on the latter (direct effect and emanation of the state).

On appeal by permission of the trial judge, the MIB now admitted that it was an emanation of the state for the purposes of the RTA 1988 liability, but still denied liability to the claimant. The MIB’s two interrelated arguments on appeal were:

1.   The relevant EU law provisions (Articles 3 and 10 of the Motor Insurance Directive) were not ‘unconditional’, and thus lacked direct effect, since they required the Member State to exercise a discretion to delegate the relevant liability to a ‘body’, where the MIB argued that it was not that body for the purpose of accidents on private land and that discretion had yet to be exercised by the UK

2.   That the MIB’s function as emanation of the state was limited, under the UDA, to the RTA 1988liability and did not include the broader obligation on the UK state to comply with the Motor Insurance Directive in relation to private land

There was no cross-appeal on the issue of ‘reading down’ the RTA 1988 liability and the decision of Soole J on that point has since been approved by the Supreme Court in R & S Pilling trading as Phoenix Engineering v UK Insurance Ltd [2019] UKSC 16, [2019] All ER (D) 132 (Mar).

What did the court decide?

The Court of Appeal dismissed the appeal and found:

1.   That the relevant discretion had been fully used by the UK by designating the MIB as the compensation body, as had already been accepted by Flaux J (as he then was) in Byrne v Motor Insurers' Bureau [2008] EWCA Civ 574, [2008] All ER (D) 307 (May). Further, on a proper interpretation of the Court of Justice’s findings in Farrell v Whitty Case C-413/15, which concerned an analogous delegation to the Irish Motor Insurers’ Bureau (MIBI), that court had already found Articles 3 and 10 of the Motor Insurance Directive obligations to be directly effective. The Court of Appeal also held it was ‘completely artificial to suggest’, on the facts of the case, that the UK government would delegate the relevant liability to a different compensation body than that which would have assumed the liability if the farmer had swerved off the road and hit the claimant, which was the MIB. There was no question of the Articles 3 and 10 of the Motor Insurance Directive obligations being conditional as the MIB suggested and accordingly they had direct effect

2.   The UK government had failed in its EU law obligation, as identified by the Court of Justice in Vnuk, to ensure that civil liability in respect of the use of motor vehicles on private land was the subject of a scheme of compulsory motor insurance, as well as in its co-extensive obligation to assign responsibility for that liability to the compensation body, just as the Irish government was found to have failed in Farrell v Whitty. The broad terms of the Court of Justice’s Farrell judgment showed that the compensation body is intended to protect and compensate victims by remedying the failure of the Member State to fulfil its obligation. Like the MIBI in Farrell, the MIB possesses special powers under the RTA 1988 and accordingly, like the MIBI, fulfils the Foster criteria, making it an emanation of the state against which the relevant directly effective obligation may be enforced by the claimant. 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

The important effect of the judgment is that a private body, namely the MIB, is obliged to meet the relevant liability of the UK state under EU law for uninsured drivers’ accidents on private land.

It would also appear that—in the event of Brexit—this will now be a right which will subsist, pursuant to section 4 of the European Union (Withdrawal) Act 2018, as one which arises under an EU Directive and has been recognised by the Court of Justice, and now the Court of Appeal, in cases decided before exit day.

There was also an alternative, stayed damages claim against the third defendant Secretary of State, which relied on the different (and more stringent) Francovich criteria and which does not now need to be pursued by the claimant (Francovich v Italy Case C-6/90).

Permission to appeal has been refused by the Court of Appeal. The MIB is seeking permission from the Supreme Court and is also seeking a contribution from the Secretary of State, whom it blames for the failure to comply with EU law.

Philip Moser QC is ranked as a leading silk in EU & competition law, procurement Law and indirect tax by Legal 500 and Chambers UK. Moser has appeared in every division of the High Court and at every level of the UK and EU courts. His practice deals with all aspects of domestic and international trade law, including the intersection of domestic and EU law, now encompassing the implications of Brexit. Moser has been nominated as ‘Barrister of the Year’ for the Lawyer Awards 2019. In MIB v Lewis, Moser was lead counsel for the successful respondent in the appeal.

Interviewed by Kate Beaumont.

First published on LexisPSL Personal Injury on 17 June 2019