Dr Nicholas Bevan

Dr Nicholas Bevan

Saturday, 9 December 2017


Lewington v Motor Insurers’ Bureau [2017] EWHC 2848 (Comm)

High Court rules that an off-road dumper truck requires compulsory third party motor cover.

Case Commentary

The facts

On 23 February 2012 Ms Lewington was severely injured in a road accident.  She had been following her uncle’s car along a dark and unlit stretch of the A120 dual carriageway at 10.45 pm when he suddenly swerved to avoid two large dumper trucks that were moving relatively slowly in the road ahead.  Although she was also able avoid hitting them, she lost control of her car causing it to leave the road. 

The drivers of both Bell B30D articulated dumpers ran off and were never traced.  It later transpired that the trucks had been stolen from a quarry.

The MIB’s rejection

When the claimant applied for compensation from the Motor Insurers’ Bureau (MIB) for her compensatory entitlement under the Untraced Drivers Agreement 2003 (UtDA), her claim was rejected.  The MIB asserted that because the accident was caused by an off-road vehicle it fell outside the scope of this scheme. 

The MIB relied on clause 4 (1) UtDA that restricts the scheme to incidents ‘giving rise to liability of a kind which is required to be covered by a policy of insurance or a security under Part VI of the 1988 Act’.  This reference is to the Road Traffic Act 1988 (hereafter RTA).  This is a sensible provision, since the MIB agreements are designed to dovetail with the compensatory guarantee for victims of uninsured and untraced drivers with the statutory insurance guarantee, which is delivered through the compulsory insurance requirement.

The flaw in the MIB’s case was its assertion that the dumper truck did not fall within the scope of the RTA.  The RTA does not impose a uniform requirement that every motor vehicle should be covered by compulsory third party insurance; only motor vehicles intended or adapted for road use.  The MIB argued that the dumper truck was not intended or adapted for road use.

Superficially at least, the MIB seemed to make a good point.  The Bell B30D articulated dumper truck was nearly 3 meters high and 2.5 meters wide. It had a top speed of 30 mph.  Whilst it was equipped with front lights, it had no rear lights.  Furthermore, it’s owners had not equipped, registered or licenced it for road use.

The claimant appealed the MIB’s rejection of her claim.  Under the UtDA an appeal lies to an arbitrator selected from a panel of arbitrators approved by the Lord Chancellor. 

The arbitral appeal

Richard Methuen QC found that the accident had been caused by the negligence of the unidentified driver of the dumper truck which Ms. Lewington swerved to avoid.  This preliminary finding of primary liability against the driver was not challenged at the arbitration hearing. 

However, on 26 September 2016, the arbitrator upheld the MIB’s rejection.  He accepted the MIB’s contention that the dumper truck did not fall within the RTA definition and so did not need to be insured.  That led to the inevitable conclusion that clause 4 (1) UtDA was not satisfied: namely the accident did not constitute a liability that required to be met by the MIB under the terms of the UtDA.

The arbitrator reached this conclusion, despite making the following findings:
  1. This model of dumper truck was capable of road use;
  2. Unusual vehicles and engineering plant of this kind are capable of being registered and taxed for road use and that ‘It may have been possible to render the [road] use of the Bell lawful’;
  3. An even wider model of the Bell articulated dump truck had been registered for road use and insured for road use at China Clay quarries in Cornwall.
A Bell B30D articulated dumper truck

He ruled that, ‘A reasonable person would not have contemplated the use of the earth mover on a road unless that use had been unlawful’.  This was an invalid test.

When confronted by the EU law standard of compensatory guarantee that the RTA and the UtDA are both supposed to give full effect to, the arbitrator accepted that the RTA was required to be construed in a way that is consistent with the legislative objective of Articles 1 and 3 of the EC Motor Insurance Directive 2009/103/EC (the Directive), whenever possible.  

The Directive prescribes the scope and extent of the compulsory civil liability motor insurance requirement that every member state is required to implement into their domestic law (Articles 1 and 3) as well as the MIB’s role as the compensating body for victims of uninsured or unidentified vehicles (Article 10).  Article 1 requires member states to ensure that the Article 3 insurance requirement applies to ‘any motor vehicle intended for travel on land and propelled by mechanical power,…’ 

The dumper truck clearly met that criteria as it does not feature a road use restriction.  However, the arbitrator opined: ‘I can see no way in which I can interpret section 185 so as to make it compatible with Article 1’. 

Appeal to the High Court

The claimant was nevertheless successful in her appeal before the High Court.

Although judgment dedicates a considerable amount of space to an analysis to the Directive, in my view this was unnecessary given, the facts of this case.  The reason being that a raft of well-established common law authorities provided a complete answer, that led to an outcome that was also consistent with the EU law insurance requirement.  Even so, it was entirely proper for the Mr Richie QC to refer to the minimum standard of compensatory guarantee prescribed under EU law, particularly as this featured so prominently in the arbitrator’s confused reasoning.  However, this does not detract from the fact that EU law was coincidental, not central, to the outcome of this appeal. 
It was common ground that the appeal turned on a single issue: what is the proper interpretation of section 185(1)(c) of the Road Traffic Act 1988 (RTA)? 

The domestic law

Section 185 RTA prescribes the type of vehicle that is subject to this insurance requirement imposed by s143 RTA (that prescribes the statutory duty to insure) and specified by s145 RTA (the scope and extent of third party cover).  It defines a motor vehicle, amongst other things as: ‘…a mechanically propelled vehicle intended or adapted for use on roads’.
The central question in this appeal was whether the arbitrator’s finding that a Bell B30D dumper truck did not conform with s185’s RTA definition was correct. 
Unfortunately, the arbitrator distracted himself with irrelevant issues, such as whether the dumper truck’s use off-road was compatible with s185, when no one disputed the fact that the accident had taken place on a road. 
Most if not all of the leading UK authorities interpreting and applying s185 RTA arises out of criminal prosecutions.  These decisions are made independently of the Directive and correctly so.  This is because the Directive does not seek to regulate criminal or civil liability.  It is concerned only with ensuring that civil liability resulting from motor vehicle use is covered by insurance.  Accordingly, in a prosecution, even where the charges postdate the UK’s accession to the European Community in 1973, the provisions of the Directive and its predecessors are irrelevant.
As if to make the point, the common law key authority is Burns v Currell [1963] 2 All ER 297, which predates even the first motor insurance directive.  The judgment was delivered by Lord Parker (with Ashworth and Winn JJ concurring).  At paragraph 300E he formulates the objective criteria for determining whether a vehicle falls within the statutory definition (of an identically worded predecessor, section 253 (1) of the Road Traffic Act, 1960):
I prefer to make the test whether a reasonable person looking at the vehicle would say that one of its users would be a road user.  In deciding that issue, the reasonable man would not, as I conceive, have to envisage what some man losing his senses would do with a vehicle, nor an isolated user or a user in an emergency.  The real question is: Is some general use on the roads contemplated as one of the users?’  [emphasis added]
There is also an extensive body of common law that offers a gloss on this dictum.  In Chief Constable of North Yorkshire Police v Saddington [2001] RTR 227 it was held that a Go-Ped electric scooter satisfied the Burns test and in DPP v King [2008] EWHC 447 (Admin) a City Mantis collapsible electric scooter was also held to be a ‘motor vehicle’ within the meaning of s185 RTA because one of its foreseeable subsidiary uses could be road use.  In both cases, the manufacturers of these diminutive conveyances had both specified that they were unsuited to road use and, again in both cases, the court had accepted that their use on a road would have been unlawful.
One need only refer back to the arbitrator’s three factual findings to reach the inevitable conclusion that the Bell B30D articulated dumper truck satisfied the requisite criteria.  This appeal succeeded through the simple expedient of applying the correct, long established, common law test in Burns; nothing more. 

European law

Mr Justice Bryan’s observation that such a finding is consistent with the Directive’s civil liability insurance requirement is also true.  One need only consider the ECJ ruling in Damijan Vnuk [2014] (C/162/13) featuring a farm tractor being used as a piece of agricultural machinery when reversing a trailer inside a barn on private property, to see the holistic scope intended by this EU legislation.   However, the decision in Lewington does not provide a complete answer for every off-road vehicle, still less a determination, on what precisely what is meant by the definition of ‘vehicle’ in Article 1 of the Directive.  It is also just as clear that the common law test is not wide enough to bridge the implementation gap in every case. 
It is incontestable that Article 1 of the Directive has a wider scope than s185 RTA that is confined to vehicles intended or adapted for road use.  Article 1 stipulates what vehicles are subject to the Article 3 insurance requirement and it defines it thus: ‘'vehicle' means any motor vehicle intended for travel on land and propelled by mechanical power, but not running on rails, and any trailer, whether or not coupled.’  Although Article 5.2 allows member states to derogate certain categories of vehicle from the Article 3 insurance requirement, I can confirm that my Freedom of Information request to the Department for Transport has revealed that UK has never invoked this power.    
The judge did not rule that all off-road mechanically propelled vehicles fall within s185’s definition.  The judge confined his ruling to the facts before him. 
Burns v Currell featured a four-wheeled go-kart, powered by an engine and equipped with a silencer and brakes but not much else.  Their Lordships, applying Lord Parker’s test held that the go-kart in question did not met the statutory criteria.  Accordingly, it is probable that in a different scenario, perhaps one featuring an even larger quarry truck, one that is obviously unsuited to road use, that it would not satisfy the Burns test either.  What then?  This is when the EU law principle of consistent construction comes into play. 

EU law consistent construction

The judge’ offers a helpful obiter discussion on the doctrine of purposive construction of national laws that are intended to give effect to a directive [at paragraphs 55 to 57]. 
He asserts in robust terms that s185 is capable of being construed in a manner that is compatible with the Directive.  However, his use of the term ‘Marleasing principles’ sets a rather quaint tone, as the EU principles have moved on a long way since Marleasing [1990] (Case C-106-89).  The modern ECJ authority on what is now termed as ‘EU law consistent construction’ is Bernhard Pfeiffer and others v Deutsches Rotes Kreuz, and others ECJ [2004] C-297/01.

Pfeiffer is to Marleasing what a Bell B30D dumper truck is to a Toyota Hilux pickup truck: they have the same function, only one of them does it on a far more impressive scale.  

Pfeiffer extends this EU law consistent construction principle to the all national rules and laws.  Furthermore, it imposes on national courts a legal presumption that the domestic law or rule is intended to fully implement the EU directive it is supposed to transpose.  This has important implications for the UtDA and the Uninsured Drivers Agreements.  If the government to seek to argue that these private law agreements between the Secretary of State for Transport and the MIB are not justiciable rules intended to confer civil rights on individuals then it would risk an infringement action by the European Commission.  This is because the EU legal certainty principle insists that every directives must be properly implemented in this way to ensure that the rights intended to be conferred are accessible and intelligible.  Accordingly, the House of Lords ruling in White v White & MIB [2001] UKHL 9 (to the effect that because the MIB schemes are private law agreements they are not subject to a Marleasing style construction) is overruled by Pfeiffer
It is important to re-emphasise, however, that it was not necessary to undertake a Marleasing / Pfeiffer style construction of section 185 (or of the UtDA, for that matter) as the vehicle in question fell within the statutory definition.

Direct effect of Articles 1,3 and 10 of the Directive

Although EU law was not determinative in Lewington, it is worth noting that in other cases, where the claim falls foul of an implementation defect, that our courts cannot always be relied on to give effect to the Directives’ protective objective through consistent construction, to cure the problem.  A recent first instance judgment in UK Insurance v Pilling [2016] EWHC 264 (QB) attests to this. 
In UK Insurance a car had burst into flames inside a building whilst undergoing repairs.  HHJ Waksman QC made an obiter comment to the effect that the geographic scope of s145 RTA (which restricts third party cover to accidents on roads or other public places) was incapable of being cured though a purposive interpretation to conform with the Directive that allowed no such restriction.  He opined this would go against the grain of Parliament’s legislative intention.  In my view he was wrong to say so.
Even so, it is important that practitioners should be are aware of an alternative (if as yet, untested) route to redress for motor accident victims involved in accidents that ought to be covered by compulsory third party cover under the Directive but which (wrongly) fall outside the remit of compulsory insurance in the UK.
On 10 October 2017, the ECJ ruled in Farrell v Whitty (no 2) [2017] (Case C-413/15)) that the MIB of Ireland (which was instituted and managed on an almost identical basis to the MIB in the UK) was subject to the direct effect of Article 10 MID and it gave further guidance that strongly indicates that the MIB is also bound by the EU law principle of direct effect (applying Foster v British Gas) because of its important role as the UK’s authorised compensating body under Article 10 of the Directive. 
If the MIB is indeed subject to the direct effect of the Directive, as I believe, then then victims injured by an uninsured vehicle of a type that does not conform with the Burns v Currell test, and where the court has failed or refused to cure the infringement by construing s185 RTA consistently with Article 1 of the Directive, can now invoke the actual wording of the Directive against the MIB as though it were enacted in UK legislation: word for word.  Unfortunately, all EU law remedies may well have a short shelf-life, due to Brexit – but that’s a topic for another day.

Reflections on Lewington

The Lewington appeal exposes some very poor judgment: by the MIB, in rejecting a genuine claim that clearly and obviously satisfied a long established common law test.  It also suggest a partisan and possibly even opportunistic approach to determing cases, out of keeping with the quasi-judicial role it has assumed under the UtDA.  

The initial arbitral finding does not reflect particularly well on the arbitrator either.  It seems fairly clear, from the extensive references made to the arbitrator’s decision in Bryan J’s judgment, that the arbitrator not only had a poor command of the issues but he either misapplied or was ignorant of a line of well-established common law authorities, that were decisive.  The learned judge devotes 13 paragraphs to the arbitrator’s errors.  

Monday, 4 December 2017


New Law Journal feature



Update on the RoadPeace judicial review

The process of RoadPeace v Secretary of State for Transport [2017] EWHC 2725 has resulted in the most far reaching challenge of the United Kingdom's implementation on the Sixth EC Motor Insurance Directive 2009/103/EC since the first such directive in 1972.

During its two year progress, the defendant has been forced to admit that  its statutory provision and private law arrangements with the motor insurance industry fail to meet the minimum standard of compensatory protection for motor accident victims.

Extensive changes have been made to the MIB agreements that govern the compensation scheme for victims of uninsured and unidentified vehicles. Furthermore, the government has openly admitted that the Road Traffic Act 1988 and the EC Rights Against Insurers Regulations 2002 which prescribe the duty to insure and confer direct rights of action against motor insurers are too narrowly scoped.

See my earlier post: EU and UK Motor Cover Compared.

It is regrettable, reprehensible even, that the government has failed to amend its defective legislation notwithstanding having been alerted to the urgent need to do so in its own February 2013 consultation and following the landmark European Court of Justice ruling in Damijan Vnuk (Case C-162/13)  over 3 years ago.

In my latest New Law Journal article, published this week, I explain why Mr Justice Ouseley's judgment in  RoadPeace is a disappointment - despite the judicial review process having resulted in the most significant reappraisal and reform to motor insurance for decades.

Declarations awaited

Declaratory orders are expected imminently.

It is to be hoped that when the learned judge delivers the declarations of non-conformity that he has agreed to, he will impose a strict time limit on the government to clarify the law by amending its legislation. Otherwise, motor accident victims who are encouraged to approach insurers and the Motor Insurers' Bureau direct will be unaware of their proper entitlement.

Continuing Lack of Legal Certainty

The rule of law depends on legal certainty to ensure that statutory provisions and compensatory schemes can be understood by a reasonably intelligent layperson.  A recent spate of ill informed judicial decisions demonstrates that not even the Court of Appeal can be relied on to decipher the true legal entitlement of individuals under EU law to a compensatory guarantee through insurance.  I refer in particular to Ward LJ's judgment in EUI v Bristol Alliance Limited Partnership [2012] EWCA and Longmore LJ's judgment in Sahin v Havard [2016] EWCA Civ 1202 and my earlier articles and posts that explain why both are per incuriam.

In my next post (on Lewington v Motor Insurance Bureau [2017] EWHC 2848 (Comm) ) I will explain how this motor insurers consortium, which has been invested with extensive quasi-judicial and inquisitional powers, continues to invoke these non-conforming statutory provisions to evade compensating genuine third party motor accident victims.

Monday, 13 November 2017


RoadPeace v Secretary of State for Transport and the Motor Insurers’ Bureau (intervening) EWHC 2725 (Admin) (07 November 2017)

On 7 November Mr Justice Ouseley finally delivered his long-awaited judgment in RoadPeace’s wide-ranging legal challenge of the way the Department for Transport (DfT) regulates compulsory third party motor insurance. 

In October 2015 RoadPeace brought a judicial review of the minister’s longstanding failure to bring the compensatory protection of motor accident victims into line with the minimum standard mandated by six European directives on motor insurance, culminating in the consolidating Motor Insurance Directive 2009/103/EC of 16 September 2009 (the Directive).  It was compelled to bring this public law action after the minister ignored its repeated calls for action.

The irony here is that the protective purpose of the first European motor insurance directive of 1972 was inspired in large measure by the same social policy objectives that induced the UK Parliament to impose compulsory insurance, over eighty-six years ago, under the Road Traffic Act 1930.

Key points

RoadPeace’s courageous decision to challenge not only the government but also a highly influential and multi-billion pound industry has exposed the government’s failure to review its transposition of the Directive over many years.

The High Court ruling confirms the United Kingdom’s statutory provision for compulsory third party motor insurance falls below the basic EU law standard that it is supposed to implement.  

Unfortunately, the judgment fails to get to grips with the European law that governs this standard.  This in turn has led to the court failing to confront a major cause of the present disparity between the UK national law provision and the EU regulatory requirements it is supposed to implement. 

Primary findings of non-conformity

The following specific infringements were identified:

  • Sections 145 and 192 of the Road Traffic Act 1988 wrongly restrict mandatory third-party motor cover to vehicle use in public spaces
  • Sections 145 and 182 of the Road Traffic Act 1988 wrongly restrict the types of vehicles subject to the compulsory insurance to road vehicles
  • Section 152(2) of the Road Traffic Act 1988 wrongly permits an insurer to invoke a misrepresentation or non-disclosure to avoid its statutory liability to compensate a third party
  • Regulation 2 of the Rights Against Insurers Regulations wrongly limits the direct right of action against motor insurers to UK accidents

Collateral illegality

Correlative of the first two findings listed above is the fact that both of the Motor Insurers’ Bureau (MIB)’s schemes for compensating victims of uninsured and untraced drivers are also tainted by the same illegality. 

This is because each of these extra-statutory compensation schemes are restricted to incidents that are subject to the compulsory insurance imposed by section 145 Road Traffic Act 1988.  Accordingly, they inherit the same statutory non-conformity with the Directive, in the way their scope:

  • ·       unlawfully excludes liability for incidents on land that is not accessible to the public
  • ·       unlawfully exclude liability for a wide range of exotic off-road vehicles

The MIB’s compensatory role is set out in four separate private law agreements with the Secretary of State for Transport: two consecutive regimes for the two schemes.  These are the Uninsured Drivers Agreement (UDA) 1999 and, for claims postdating 1 August, the UDA 2015 and the Untraced Drivers Agreement (UtDA) 2003 and, for claims postdating 1 March 2017, the UtDA 2017.

Restricted declaratory findings

The judge has agreed to make declarations of non-compatibility on the first three primary findings listed above, on terms yet to be agreed.  However, he has made no such commitment concerning the remaining primary and collateral grounds; notwithstanding their evident non-conformity with EU law.  

Grounds dismissed

The judicial review also featured several additional grounds.  These were sensibly grouped under two broad headings that reflect two distinct issues that go to the adequacy of the UK’s implementation of the Directive:

The first issue: Does the UK have sufficient legislative discretion to allow motor insurers to restrict or exclude their liability to third party claimants, beyond the single instance expressly sanctioned by the Directive?

The second issue: Do the MIB agreements provide an adequate level of compensatory guarantee?

In both instances, the claimant’s contentions are dismissed.  Unfortunately, the judgment is badly deficient in the way it misconstrues well established European law authorities and principles that led the judge into error.

I have agreed to provide a detailed critique of this judgment in the Journal of Personal Injury Law. In the meantime, I offer following observations.

Where the judge erred

1. On the UK’s legislative discretion

Part VI of the Road Traffic Act 1988, defines the scope and extent of compulsory third party insurance in the UK.  It is a curious mishmash of different initiatives and amendments that have accrued over the past 86 years through the simple expedient of bolting on new clauses to the original 1930 legislation, ‘without any apparent belief in the mind of the legislature that the scion was incompatible with the stock’ (per Lord Hailsham LC in Gardner v Moore and others [1984] 1 All ER 1100).  Unfortunately, this has produced a chimera whose legislative intention and meaning is often difficult to discern.

The UK authorities

There appear to be two schools of opinion on the thorny issue as to whether, and if so to what extent, can motor insurers ring-fence their statutory liability to compensate third-party claimants within their policy terms.  Ostensibly, the answer is to be arrived at by construing Part VI of the Road Traffic Act 1988, which prescribes the scope and extent of third party motor insurance in the UK. 

The introduction of compulsory motor cover in 1930 created what is now a multi-billion-pound captive market exclusively reserved to an oligopoly of companies whom the DfT has authorised to operate in this jurisdiction. There has always been a clear and obvious social policy objective behind Parliament’s decision to compel third party cover. It is a simple one: ‘[it] is designed to protect the innocent third party from the inability to pay of a driver who incurs liability by causing him death or personal injuries’ again per Lord Hailsham, in Gardner.

One group of authorities, represented by the judgments of Denning MR and Diplock LJ’s in Hardy v MIB [1964] 2 All ER 742, Hailsham LC’s judgment in Gardner and most recently Glouster LJ’s and Lloyd Jones LJ’s judgments in Cameron v Hussain [2017] EWCA Civ 366, attempts a holistic approach: one that meets the Parliamentary aim of insuring that motor policies are fit for their intended purpose of guaranteeing the compensatory entitlement of accident victims.

Another group of authorities, exemplified by Ward LJ in EUI v Bristol Alliance Limited Partnership [2012] EWCA Civ 1267 and most recently in Sahin v Havard [2016] EWCA Civ 1202 preserve to a considerable degree the contractual autonomy of motor insurers to exclude or restrict their liability to third parties, save to the limited extent expressly precluded by sections 148 and 151 of the Road Traffic Act 1988.  This approach reflects the long standing practice that is almost universally accepted in the UK which allows insurers to limit the scope of third party cover (e.g. to social and domestic use or to a maximum mileage) and to exclude liability (e.g. for deliberate damage or road rage) and to treat use made in contravention of a policy restriction as being completely uninsured, unless the term's effect is one of the handful of exclusions expressly nullified by sections 148 and 151.  Such claims are routinely assigned as MIB claims under the less advantageous terms of the Uninsured Drivers Agreements.

I have consistently argued that the first school of UK authorities is consistent with the comprehensive and absolute nature of the compensatory guarantee mandated under EU law by the Directive.  I am firmly of the view that the two unanimous Court of Appeal rulings that represent the second, qualified compensatory guarantee, are both bad law.  I have consistently contended here and elsewhere that they were arrived at per incuriam because they fail to apply a consistent line of European Court of Justice (ECJ) rulings on this very point. 

The EU law

The schism in judicial thinking in the UK would present the ablest first instance judge with a tricky dilemma, were it not for two decisive factors.  First, the EU law principle of primacy of EU law over national laws intended to implement EU law and secondly, the unequivocal and absolute nature of the insurance requirement prescribed by Article 3 of the Directive.
Article 3 stipulates, inter alia that:

Each Member State shall, subject to Article 5, 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.’

ECJ rulings

The ECJ has ruled, time and again, that the twin legislative aim of liberalising the free movement of people and vehicles within the EU and of protecting accident victims means that:

‘Article 3(1) of the First Directive precludes a company insuring against civil liability in respect of the use motor vehicles from relying on statutory provisions or contractual clauses in order to refuse to compensate those victims for an accident caused by the insured vehicle.’

This ruling represents a clear statement of EU law to the effect that the insurance guarantee must be an autonomous one.  It is also clearly and obviously one of general application and this is borne out by the way it has been applied.

The rule was first propounded over twenty years ago in Bernaldez [1996] Case C-129/94 and applied to preclude a contractual exclusion of liability to indemnify an intoxicated driver.  It has been applied repeatedly by the ECJ in various contexts ever since, such as: in Candolin [2005] Case C-537/03 against a statutory exclusion of liability to a passenger whose fault was amounted to a significant contributing factor in their loss or injury; in Farrell no. 1 [2006] Case 356/05 to preclude a statutory provision allowing an insurer to restrict the scope of third party cover to parts of a vehicle equipped with seating; in Churchill [2011] Case C442/10 to preclude the automatic disentitlement of a passenger victim who is also the a policyholder that knowingly permitted an unauthorised person to drive his vehicle, and most recently in Fidelidade-Compania [2017] Case C-287/16 to a statutory provision that purported to entitle an insurer to avoid liability to compensate a third party on the basis that the policy was void ab initio due to the policyholder deceiving the insurer at the inception of the policy.  In each of these scenarios, the same passage was recited and applied. 

Furthermore, the ECJ ruling in Vnuk [2014] Case C-162/16 offers an obverse illustratio of the same principle, this time set in negative terms concerning:  ‘the objective of protection pursued by the First to Third Directives [which are now consolidated in ‘the Directive’], the view cannot be taken that the European Union legislature wished to exclude from the protection granted by those directives injured parties to an accident caused by a vehicle in the course of its use, if that use is consistent with the normal function of that vehicle.’ In that case, even the use of tractor on private property, inside a barn, and as a piece of agricultural machinery, was subject to Article 3’s insurance requirement.
The Directive allows for only one instance where an insurer can rely on a contractual provision to exclude liability to a third-party claimant.  This is restricted to a passenger silly enough to get into a vehicle that he or she knows has been stolen.  This is set out in Article 13 of the Directive.  Furthermore, the ECJ has repeatedly ruled this exception, forming a derogation from the autonomous entitlement principle, must be construed strictly.

This reasoning is bolstered by what is now recital 15 of the Directive (but which was introduced in the Second Motor Insurance Directive 84/5EEC).  This explains that it is in the interest of victims that the effects of certain exclusion clauses should be limited to the relationship between the insurer and the person responsible for the accident.

EU law cover that is fit for purpose

Accordingly, the inescapable result of this consistent teleological approach to interpreting the scope and extent of the insurance requirement mandated by Article 3 is as follows:

  • Every motor policy, once issued, consists of a free-standing guarantee to non-contracting third parties to satisfy their compensatory entitlement up to the minimum amounts set by the Directive and subject only to the single permitted passenger exclusion.  
  • This guarantee is inviolate. Whist the policyholder may face a contractual liability to the insurer for any misuse or other breach of policy, the third party’s entitlement is unaffected by any contractual limitation or exclusion not expressly provided for within the Directive.

Ouseley J’s error

The learned judge was confronted in this judicial review with a UK regulatory regime, that allows motor insurers to routinely impose numerous conditions to and qualifications in cover on their policyholders and to invoke these against innocent third party claimants.  His reaction to these time-honoured practices was to attempt to reconcile the irreconcilable.

The judgment attempts this feat by conceiving an idiosyncratic approach to interpreting EU law.  However, it is one that has no basis in EU law.  In doing so, Ouseley J adopts the unfortunate line taken by Ward LJ, when confronted by the same long established non-conformity with the Directive that arose in EUI v Bristol Alliance

Ouseley J ruled that the ECJ’s statement of principle concerning the autonomous nature of the guarantee (considered above in various different contexts), is not intended to have a general application beyond the specific facts of the cases where it has been applied in the past. This cautious, precedent led, approach appears to conflate elements of stare decisis under our common law with the ECJ’s teleological approach to interpretation of EU law.

These ECJ rulings give no hint that the protective and autonomous guarantee principles espoused in these authorities are confined in this fact-specific manner; in fact their application in a wide range of situations demonstrate a diametrically opposite intention.

The sticking point seems to be Ouseley J’s empathy with the incredulity previously expressed by Ward J in EUI v Bristol Alliance: that if this principle were to have a wide and general application (as indeed it obviously should), ‘then the way the Road Traffic Act combined with the MIB scheme has always operated is not compliant with the Directives.’  That is precisely the point made by this judicial review.

The only gloss given to Ouseley J’s eccentric and misinformed approach is to justify the outcome by a priori reasoning: ‘It would be remarkable if, without spelling it out in so many words, the CJEU had decided as far back as Bernaldez, the  language of which, in its usual way, it  repeats in subsequent cases, that any use which could be made of a motor vehicle required compulsory insurance .’

As it happens, the the autonomous guarantee principle is nt aberrant construction dreamt up by an overzealous ECJ. As Advocate General Mengozi’s opinion in Csonka [2013] Case C-409/11 explains, the holistic and autonomous nature of the insurance requirement was clearly intended by the European Council and Parliament and it was part of a concerted attempt to plug the gaps in compensatory protection left by the First Motor Insurance Directive of 1972.  This can be deduced from the way it abandoned the first draft of the Second Motor Insurance Directive that expressly reserved the right of insurers to exclude or restrict their liability to third party claimants within their policy terms and by the insertion of what is now Recital 15 (mentioned above).  These and other factors led both the Advocate General to opine and the ECJ to rule first, that the Article 10 compensating body is a last resort and second, that its role is confined to two scenarios only: (i) where the vehicle responsible is unidentified and (ii) where no policy exists at all.

The ECJ’s judgments, in Csonka and Churchill before that, leave little room for any doubt.  The compensatory protection is required at the anterior stage of insurance mandated by Article 3 and is not to be deflected as a mutualised liability of the Article 10 compensating body, which in the UK is the MIB.

The European law requirement is both clear and fair

Properly construed, (that is to say interpreted correctly to give a meaning that is consistent with the EU law it is supposed to implement ,Marleasing-style), Section 151 of the Road Traffic Act 1988 ought to require every authorised motor insurer to satisfy any outstanding judgment in respect of an incident that is required to be covered by motor insurance under Article 3 of the Directive, regardless of whatever terms have been agreed between the contracting parties.  This amounts to an autonomous regulatory guarantee; not a quasi-contractual entitlement. 

This construction is consistent with the UK Parliament’s legislative intention, as Lloyd Jones LJ makes clear in the following extract from Cameron v Hussain [2017] EWCA Civ 366.  At paragraph 88 he says: ‘The intention of Parliament in enacting section 151 [which imposes a statutory duty on motor insurers to satisfy judgments against their assured] was that a motor insurer should compensate any parties injured by a vehicle it insures, even if the insurer has no contractual liability to indemnify the driver of the insured vehicle under the policy. The insurer is given a remedy against the tortfeasor under section 151(8) but the risk as to whether that will be effective is clearly intended to be borne by the insurer…’ [explanation added in parenthesis]

Therefore I believe that Ouseley J’s ruling on this important issue is not only per incuriam (on account of its misapplication of well-established EU law principles and authorities) but it is also perverse in the way it undermines Parliament’s legislative aim of protecting motor accident victims.

2 Specific issues with the MIB Agreements

During the course of this long running judicial review, in which RoadPeace granted the DfT generous stays to allow them to consider their position and to remedy the infringements, the government made a number of important concessions, some of which were implemented within the MIB agreements.

For example, despite the DfT and MIB declaring publicly in July 2015 that they had no intention of amending the Uninsured Drivers Agreement 2015, this is precisely what they were forced to do after RoadPeace brought the judicial review.  The UDA was amended by a supplementary agreement that removed two unlawful exclusions of liability along with a constructive knowledge provision because they all offended the equivalence of the compensatory protection mandated by Article 10 of the Directive.

Further concessions where made and revisions introduced under the new Untraced Drivers Agreement 2017, again introduced in response to specific grounds raised in the judicial review. 

These remaining issues largely concerned sufficiency of these concessions and to the fact that the revisions were not given any retrospective effect.  Ouseley J found against the claimant on all these points for reasons that are far from satisfactory.  These will be covered in a separate blog and in more detail within the Journal of Personal Injury Law.

Suffice it here to say that the learned judge concluded that the following provisions did not breach the EU law requirement:

  • The ‘significant injury’ threshold requirement for property damage under the UtDA 2017
  • The lack the triple protective measures for children and mentally incapacitated claimants   along the lines prescribed by Dunhill v Bergin [2014] UKSC 18 under the UtDA
  • The lack of retrospectivity of the police reporting requirements, set as a condition precedent of any liability under the UtDA 2003

These are issues that will need to be fully argued in individual cases.

An inconvenient truth

RoadPeace’s judicial review has revealed that our national law provision in this area is so badly flawed that we cannot take its provisions at face value.

The judge’s findings of non-conformity, in so far as they go, confirm what has been obvious for several years.  Extensive tracts of the Road Traffic Act 1988, the Direct Rights Against Insurers Regulations 2002 and the MIB compensation schemes as well as the Secretary of State’s regulation of the motor insurance industry are all seriously deficient.  Innocent victims are being failed by this institutionalised illegality.

Ministerial neglect

The DfT was given explicit warnings in April 2013 from various sources that our national law provision for compulsory third party motor insurance failed to conform with the Directive.  These warnings were made by a number of informed respondents to its own February 2013 consultation on the MIB Agreements. The minister chose to ignore that advice; necessitating this judicial review.

Wednesday, 8 November 2017


RoadPeace v Secretary of State for Transport and the MIB  EWHC 2725 (Admin) 

UK laws on motor insurance breach European Law

On 7 November Mr Justice Ouseley delivered his long awaited judgment in Court 19 of the Royal Courts of Justice in London in this unprecedentedly wide-ranging judicial review of the government's regulation of compulsory third party motor insurance.

The judicial review was brought by road safety charity RoadPeace after the Secretary of State for Transport ignored its repeated calls for the Road Traffic Act 1988, The Rights Against Insurers Regulations 2002 and his private law agreements with the Motor Insurers' Bureau to be brought into line with the minimum standard of compensatory protection required under the European Motor Insurance Directive 2009/103/EC. 

The government has been forced to concede several of the grounds cited in the judicial review prior to the hearing in February 2017 and changes have been made to the MIB Agreements that govern the compensatory guarantee scheme for victims of hit and run drivers and uninsured drivers.  

The judgment confirms that the UK implementation is defective in several respects.  However, the learned judge did not agree with RoadPeace's concerns that the government's concessions did not go far enough.  Neither did the learned judge accept RoadPeace's contention that the time honoured practice, that enables motor insurers to invoke against accident victims numerous contractual exclusions qualifications and restrictions in liability to evade their statutory liability, conflicts both with Parliament's social policy objective underscoring compulsory insurance and, more to the point, with EU law.

The full transcript of this judgment can be accessed on the BAILII website herehttp://www.bailii.org/ew/cases/EWHC/Admin/2017/2725.html

I have been involved in this public law action from the outset. I believe that the judge has misconstrued the EU law motor insurance requirement imposed under European Motor Insurance Directive 2009/103/EC.  

I will post a more detailed blog explaining my views shortly.

Monday, 6 November 2017


In Part 2 of my New Law Journal double-feature, published this week, I explain why the European Court of Justice's ruling in Farrell v Whitty 2 (Case C-413/15) is a judgment day for the Motor Insurers' Bureau.


Temporary free to view link 17 -25 Novemberhttps://drive.google.com/file/d/193ARTi9xu09ldfJz8dpnwNqHaXq9HOsn/view?usp=sharing

New Law Journal subscribers can access my article online from this link: https://www.newlawjournal.co.uk/content/state-liability-betwixt-between-brexit-pt-2

Wednesday, 1 November 2017


Automated and Electric Vehicles Bill 2017

The government has reintroduced its proposals to legislate to extend compulsory motor insurance cover the use of automated vehicle technology. These are set out in Part 1 of the Automated and Electric Vehicles Bill which passed its second reading in the House on 23 October 2017.  

The House of Commons Public Bill Committee has invited comments on its provisions here: https://www.parliament.uk/business/news/2017/october/have-your-say-on-the-automated-and-electric-vehicles-bill/   

Short consultation deadline

There is very little time given in which to respond.  Any submission must be received in good time before 16 November 2017.

Readers can access the House of Commons Briefing Paper (CBP 8118, 20 October 2017) from the link provided at the bottom of the page here: http://researchbriefings.parliament.uk/ResearchBriefing/Summary/CBP-8118#fullreport

Initial observations

This Bill replicates some of the proposals in the Vehicle Technology and Aviation Bill that lapsed with the last government.  But there are some differences.

Lack of candour

The Briefing is less than candid in its failure to acknowledge that Article 3 of the European Motor Insurance Directive 2009/103/EC already requires member states to ensure that any civil liability resulting from the use of motor vehicles is covered, this includes technical and mechanical defects that are not attributable to the owner, keeper or user’s fault.  Whereas section 145 of the Road Traffic Act 1988 wrongly restricts the scope of compulsory insurance to cover the personal liability of the vehicle user; which isn’t the same. A consistent line of European Court of Justice rulings culminating in Damijan Vnuk (Case C-162/13) in 2014 makes this abundantly clear.

Following Farrell 2, see blog, anyone injured or suffering property damage caused not by driver or user error but by a product defect can now sue the Motor Insurer’s Bureau direct, relying on the actual wording of the aforementioned directive.  


An important feature of the government’s proposals is to impose what is in effect a strict form of liability on the insurer of the responsible vehicle for any injury or loss caused by that vehicle when used in an automated driving mode.  

The key passage here is Clause 2 (1) (a) of the Bill.

‘2. (1) Where
(a)        an accident is caused by an automated vehicle when driving itself,

The weasel word that concerns me is ‘caused’.  This is a term has a very special significance for tort lawyers and it has resulted in an extensive corpus of case law.

My concern is that to trigger the insurer’s statutory liability under these provisions, a child pedestrian or cyclist, a passenger or other innocent victim seems likely to be required to establish on the balance of probability that the incident was caused or contributed to by the automated vehicle’s systems being in operation.  In an ideal world this would be readily established by the on-board computer systems. How easy it will be in practice to access this data or interpret it is an unknown.  However there is also an ambiguity in the language used that appears to allow an insurer to argue that the loss or injury was not caused by the automated system. 

Access to the civil justice is far from equal.  With no public funding of claims, exorbitant court fees and nugatory recoverable fees for most claims and no spare revenues for law firms to risk pro bono work, difficult legal challenges are out of reach for all but the wealthy.  Added to this, an ordinary private citizen faces a practically insurmountable inequality of arms if required to contest a highly technical issue with a well-resourced manufacturer or insurer.  The last thing we need is any lack of legal certainty.


My strong preference would be for the Bill to be amended to provide in clearer and unequivocal terms that the insurer will be under an absolute liability to compensate whenever an accident results involving a motor vehicle that is set in automated mode.  This can still be subject to any other causes that the insurer can establish, such as the driver error of a third party. 

I suspect that absolute liability (in the absence of any relevant contributing cause that the insurer can pursue separately) is the Parliamentary intention anyway.  However, insurers have a long and successful track record of exploiting any ambiguity in individual claims to avoid their liability and exposure to risk in the wider context of the motor insurance market; as is entirely proper.

The Government has a moral duty to ensure that the public are not exposed to unnecessary danger by the introduction of automated technology.  If automated vehicle systems are to be fit for purpose then they must be safe.  It is logical therefore to impose absolute liability, in the clearest of terms, for any injury or other loss resulting from the deployment of automated vehicle systems.

Further thought also needs to be given to the standard of care expected of a user when monitoring a vehicle that has been deployed in an automated or driverless mode. Common sense indicates that the same level of alertness cannot be expected.  

It seems highly probable that manufacturers and insurers will seek to limit their exposure to claims by specifying detailed provisions and requirements (perhaps unrealistic ones) that most users will never read, still less apply.  We must learn the lessons from the naive manner in which compulsory third party motor insurance was introduced in 1930, where insurers issued policies that were so extensively hedged by exclusions and restrictions in cover as to defeat the Parliamentary social policy objective. Further legislation was necessary and even that was fatally compromised, resulting in the immensely complex and in places contradictory case law, well illustrated by Ward LJ's judgment in EUI v Bristol Alliance Limited Partnership in 2012.  These problems are the subject of a wide ranging judicial review by road safety charity RoadPeace.

This is also a consumer issue that needs to be properly regulated. Unfortunately, the Department for Transport’s record in this regard is lamentable.  Every year, millions of motor policies are issued with numerous restrictions in scope and limitations of liability that are unlawful as under EU law only one exclusion is permitted.  The DfT is responsible for regulating every UK motor insurer and has known about these failings for many years but done nothing. In particular, it was warned of this systemic illegality by several law firms practicing in this field in response to its own consultation on the MIB agreements in the spring of 2013.

Friday, 27 October 2017


In Part 2 of my New Law Journal double-feature, published this week, I explain why the European Court of Justice's ruling in Farrell v Whitty 2 (Case C-413/15) is a judgment day for the Motor Insurers' Bureau.


New Law Journal subscribers can access my article online from this link: https://www.newlawjournal.co.uk/content/state-liability-betwixt-between-brexit-pt-2

Alternative linkhttps://drive.google.com/file/d/193ARTi9xu09ldfJz8dpnwNqHaXq9HOsn/view?usp=sharing

Thursday, 26 October 2017



I recently joined the editorial team of this publication.  Today the first update that I have contributed to arrived. I have every reason to feel a little relieved as Malcolm Johnson, Black Lapthorn Claims, and Professor Birds were kind enough to give me a free reign to add a new section to Part 9 on the Motor Insurers Bureau.

In Section 3 of Part 9 I advance what was a highly controversial argument.

I contend there that the numerous unlawful gaps in compulsory third party motor insurance which are non compliant with European law can be remedied by a new and direct route.  I argue that for as long as the UK is part of the European Union, accident victims can present a direct action against the Motor Insurer's Bureau based on the directly applicability of the Sixth (consolidated) Motor Insurance Directive 2009/103/EC.  I explain the far reaching implications for practitioners.

There was no precedent for this.  Indeed Mr Justice Flaux ruled in Byrne v MIB 2007 that the MIB not an emanation of the state and that the provisions of this directive's predecessors were not capable of direct effect against it. I have always been critical of that finding but no one has challenged it.

This has enabled motor insurers and and the Department for Transport to effectively ignore doing anything to remedy the systemic illegality that frustrates the ability of accident victims to invoke the rights conferred under the Motor Insurance Directive.  The case of Ellits & Wilson v MIB (unreported) of 11 May 2015 is a case in point. Here an illegal exclusion clause that purported to entitle the MIB to exclude its liability to compensate a child, who was injured as a passenger in his mother's car by a driver who gave false details at the accident scene. The sham justification given was that he had failed to report the incident to the police and a clause in the MIB's Untraced Drivers Agreement 2003 entitled them to reject the claim without further ado. Both the arbitrator and the appeal judge wrongly held that they were compelled to apply the MIB's exclusion of liability strictly, heedless of the fact that this exclusion was not permitted under EU law; regardless of the injustice caused.

Direct effect of the defectively implemented directives enables accident victims to circumvent this institutionalised injustice. It enables private victims to invoke the wording of the directive as though it were a statutory provision.

Earlier this month, the European Court of Justice ruled in Farrell v Whitty (C-413/15) that the Motor Insurers' Bureau of Ireland (which was set up on an almost identical  basis to the MIB in Britain) is subject to the direct effect of the relevant provisions in the Motor Insurance Directives. 

The reasoning set out in the ruling makes it abundantly clear that the MIB is also bound by the direct effect of these directives, as I have argued.

What was a controversial and untested theory is now accepted as orthodoxy.

The wonderful Jan Miller at the New Law Journal, who has been a staunch supporter of my campaign for wide ranging reform in this area for years, will be publishing a two-part feature by me on this ground breaking ruling that has wide implications that extend far beyond motor insurance.  Part 1 comes out this Friday.

Tuesday, 17 October 2017


Public consultation on REFIT Review of Directive 2009/103/EC on motor insurance


The European Commission are seeking your views on reforming its legislation on motor insurance.

I have been consulted by a number of firms and special interest groups on this important consultation exercise.  

I am happy to share my consultation views with anyone interested in submitting their own proposals for reforming the law of motor insurance so that it is better suited to meet the challenges of the 21 century. Email me at mail@nicholasbevan.com 

Responses should be submitted using the online questionnaire form. 

Follow this link to find out more and to submit your views: https://ec.europa.eu/eusurvey/runner/motor-insurance-2017?surveylanguage=en 

Tuesday, 10 October 2017

FARRELL V WHITTY 2017 (Case C‑413/15)

Landmark European Court of Justice ruling:
  • on the direct effect of the Motor Insurance Directives and
  • the legal status of the Irish Motor Insurer’s Bureau

 Click here to read the judgment in Elaine Farrell v Alan Whitty,Minister for the Environment, Ireland, Attorney General and the Motor InsurersBureau of Ireland (Case C413/15) which was delivered today. 

This is a very far reaching and important ruling on the conditions necessary to trigger direct effect of a directive against a body or legal entity not obviously part of the state. 

The Court of Justice's ruling confirms that national courts should not apply the criteria for direct effect set out in paragraphs 18 and 20 of Foster (C-188/89) as though they are rigid statutory formula.  Furthermore it appears to have deliberately refrained from devising an free standing definition of what constitutes an emanation of the state for these purposes. It validates my previously expressed views that the Foster criteria should be applied in the light of the underlying rationale that justifies direct effect as an exception to the basic rule (that directives do not have horizontal effect and so cannot be invoked in claims between private individuals).  This exception is intended to prevent member states from taking advantage of their own failure to implement EU law.  

This ruling supports much of what I have argued previously concerning the Motor Insurers' Bureau's liability for gaps in the compensatory protection of accident victims within the Road Traffic Act 1988 and the EC Rights Against Insurers Regulations 2002 for several years (albeit with some differences).  

The judgment certainly increases the prospects that any properly informed court, applying its ratio, will find the MIB is subject to the direct effect of Article 10 of the Consolidated Directive 2009/103/EC on motor insurance. Article 10 requires every member state to set up or authorise a body to compensate victims of uninsured or unidentified vehicles at least to the standard of the Article 3 motor insurance requirement.  The broad and holistic scope of this obligation is much wider than provided for under our national law provision in the UK. 

Indeed I have argued elsewhere that any body charged with discharging the public service role of the Article 10 compensating body (for victims of uninsured and unidentified vehicles) is prima facie subject to the direct applicability of Article 10.

The Court of Justice ruled that any organisation or body charged by a state with discharging its obligations under Article 10 is performing a public service and that if it also enjoys special powers for this purpose beyond those enjoyed by ordinary individuals then it to be treated as though it were part of the state and thus subject to the direct vertical effect of Article 10 of the Consolidated Directive 2009/103/EC on motor insurance.  It is not necessary to establish that the body is under the control of the state; but where this exists the entity is to be treated as an emanation of state.  This contrasts with Flaux J's finding in Byrne v MIB [2007] EWHC 1268 (QB) that the MIB was not an emanation of the state because it was not under the control of the state.  

Although the Court of Justice ruling is set in its usual oblique style, and whilst it fails to go quite as far as the Advocate General's recommendations for simplifying and explicating the test for direct effect, it should be sufficient to allow a fresh legal challenge in the UK that could open up a new route of redress in this jurisdiction for victims denied their compensatory entitlement due to the government's failure to properly implement EU law.   This will involve suing the MIB in an action based on the wording of the Directive as opposed to the terms of its private law agreements with the Secretary of State for Transport (aka the MIB agreements).

At paragraph 34 the Court of Justice reformulates the criteria indicative of any organisation so closely associated with the state as to warrant liability for the state's failure to implement a directive. Applied to the MIB, all that needs to be established is either (i) it is under the control or authority of the state, presumably not generally but in respect of its public service role it is discharging as the authorised compensating body, or (ii) that in addition to being responsible for a public service it has been given special powers for that purpose.

In Byrne Flaux J found that the although the MIB did discharge a public service, it did not possess any special powers (in addition to not being under the control of the state). I have argued elsewhere that he erred in his findings on the last two points. This (second) preliminary ruling from the Court of Justice in Farrell tells us that it is not necessary to establish all three criteria listed in paragraph 20 of Foster (public service, control by the state and special powers).  Clearly, where all three elements are established then it will automatically qualify.However there is ample evidence that not only does the Minister for Transport have ultimate control and influence 

The MIB is likely to continue to argue that it possess no special powers, as it succeeded in doing so in Byrne. However, I do not believe that the court was fully acquainted with all the relevant facts and that were a different court properly informed of the MIB's actual powers then this would be readily established.  

See my earlier blog:  Putting Wrongs To Rights Part 2 

It is noteworthy that in Farrell the Court of Justice took the view that the statutory requirement that every Irish motor insurer must be a member of the Irish MIB and also to fund it's compensatory role, effectively conferred it with a special power: to enforce these contributions. The Irish and UK mandatory membership and funding requirements for the compensating body, whilst not identical, are remarkably similar in all important respects. Given that any court will be required to apply this ruling purposely and in keeping with the underlying principle (of preventing the state from exploiting its own failure to fully implement the Directive) then I think it likely that such differences as there are will be deemed to be superficial and so fail to avail the MIB of this defence in future.

The potential implications for the motor insurance industry and individual victims affected by the UK's default are huge. This is due to the extensive number and range of infringements that speckle the UK's transposition of this Directive. 

Motor accident victims injured by off-road vehicles that do not conform with the statutory definition in section 185 of the 1988 Act or by motor vehicles on private property or from incidents caused by mechanical or software defects that the user is not responsible for, (which are not subject to compulsory insurance under a conventional construction of s145 of the 1988 Act) should all benefit from this ruling.  The MIB will be obliged to step in and compensate instead.  There is one important caveat to this though: the EU law doctrine of direct effect along with other EU law remedies look set to lapse on Brexit.

I will be offering a more detailed commentary of this decision in the New Law Journal shortly.

Sunday, 8 October 2017


The following national law provision fails to conform to the minimum standard of compensatory protection mandated by Directive 2009/103/EC on motor insurance.  This undermines the social policy objectives underlying compulsory third party insurance.  

It affects the following:

·         Extensive tracts of Part VI of the Road Traffic Act 1988
·         The EC Rights Against Insurers Regulations 2002
·         The Uninsured Drivers Agreements 1999 and 2015
·         The Untraced Drivers Agreements 2003 and 2017

The problem is compounded by an extensive body of case authorities misinterpreting the above including (but not confined to) the following:

·         Delaney v Pickett [2011] EWCA Civ 1532
·         EUI Ltd v Bristol Alliance Ltd Partnership [2012] EWCA Civ 1267
·         Sahin v Havard & Riverstone Insurance (UK) Ltd [2016] EWCA Civ 1202

I paste below a couple of my lecture slides that offer a comparative law overview.

The first slide contrasts the qualified and restricted nature of the UK legislative provisions imposing compulsory third party motor cover with the holistic and absolute standard required under EU law.

European law insists that once a policy has been issued, then subject to the single permitted exclusion set out in Article 13 that applies to a passenger who enters a vehicle knowing it has been stolen, the insurer is liable to compensate the victim come what may.

This obligation is a free standing one. A third party motor accident victim's entitlement is impervious to any contractual limitation, exclusion or restriction not permitted by the Directive.

 This slide compares the Motor Insurers' Bureau's role according to conventional understanding with the highly prescriptive and limited role permitted under EU law.

I discuss these issues at some length in my forthcoming feature in Section 3 of Part 9 of the Encyclopedia of Insurance Law, published by Sweet & Maxwell (ISBN:  9780421281509).

I provide professional consultancy services on motor insurance as well as in house training on this and other related legal topics.

07968 427134


I have recently joined the editorial team of the Encyclopedia of Insurance Law.  What follows is an extract from the forthcoming update in the EIL that I prepared in July and which is due to be released in November 2017.

Publisher details


Reproduced here with kind permission of Sweet & Maxwell

Part 9: The Motor Insurers’ Bureau

Section 3: The MIB’s extra-statutory liability

Section 2 considers the MIB’s rights and responsibilities in two areas:  first, within two separate compensatory schemes agreed between it and the Secretary of State for Transport (the MIB Agreements) acting under his executive powers conferred under section 2 European Communities Act 1972 and secondly, pursuant to the Motor Vehicles (Compulsory Insurance) (Information Centre and Compensation Body) Regulations 2003 that implements the fourth EC Directive (2000/26/EC) on motor insurance.

This section is entirely new and it considers the MIB’s potential liability to compensate third party victims independently of the aforementioned domestic rules and regulations, through the application of EU law, as opposed to the UK’s transposition of the same EU law on motor insurance[1]


·         The current orthodoxy as to the role and status of the MIB is that it is independent of government control; that whilst the state has devolved to it its responsibility for ensuring that motor accident victims are compensated either through insurance provision or by an authorised compensating body in accordance with European directives on motor insurance, this of itself is said to confer no special status, rights or responsibilities on the MIB beyond those that apply to any other subcontracting provider of such services.  This account limits the MIB’s compensatory responsibilities to those it has agreed to under the terms negotiated with the Secretary of State, allegedly at arm’s length: no more; no less.  These views were largely endorsed by Flaux J in Byrne v MIB [2007] EWHC 1268 (QB).  However, further analysis suggests that such an outlook is overly simplistic; erroneous even[2].
·         This section will consider the way the MIB’s legal status under EU law is influenced by the compensatory role it has assumed.  It will also assess the effect this has in practical terms on the scope and extent of the MIB’s liability to compensate individual claimants.  There is growing support for the contention that a proper analysis of the MIB’s relationship with the Department for Transport reveals a much closer interdependency between the state on the one hand and the MIB and its membership on the other.  It is becoming increasingly apparent that the UK state has always exerted a very considerable degree of de facto control and influence over the MIB and its membership as well as the various public services it discharges on the state’s behalf in the context of motor insurance and in its capacity of compensator of victims of uninsured and untraced drivers[3].  It is argued here that both these factors[4] have important implications for the MIB’s legal status and its responsibilities under EU law.  It is contended that these factors, independently of one another, are each capable of fixing the MIB with additional liabilities to those it has contracted to meet within its private law agreements with the Secretary of State for Transport.  This derives from the application of well-established EU law principles that appear, hitherto at least, not to have been properly addressed by the UK courts.
·         It follows from the above that an appreciation of the relevant European law is an important prerequisite to any proper understanding of the MIB’s legal status and responsibilities.  Accordingly, this section begins by outlining the relevant European law and principles before attempting to explain the constitutional responsibilities that devolve upon the MIB independently of its contractual responsibilities by virtue of its role as the UK’s authorised body charged with discharging the public service roles prescribed by Articles 10, 23 to 25 of EC Directive 2009/103/EC on motor insurance (the Directive).  
·         This European law analysis produces some interesting hypotheses:
o   The first of which is that the MIB agreements, considered above in Section 2, serve a dual role.  Not only do they define the MIB’s contractual obligations to fund and manage the two compensatory schemes for victims of uninsured and untraced drivers but they also constitute part of the state’s rules and laws implementing the Directive.  It is in this latter capacity that these private agreements appear to fall within the purview of the principle of European law consistent construction: whereby national provisions adjudged to be inconsistent with the rights intended to be conferred on individuals under a Directive are capable of being brought into line with the European requirement through a process of Marleasing-style[5] purposive interpretation.
o   Secondly, the MIB’s legal status and role as the UK state’s authorised body entrusted with discharging the public service role of compensating victims in accordance with the terms of its agreements with the Secretary of State for Transport may expose the MIB itself, to the direct and binding effect of the wording of the relevant provisions of the Directive they are intended to implement; independently of the agreements themselves.  Indeed, it is likely that any organisation entrusted by a member state with the task of discharging its obligations under the Directive to compensate motor accident victims will be considered so closely associated with the state to warrant its provisions having direct effect.  This has important implications for cross border claims within the European Union.  If the European principle of direct effect applies here, it has the potential to enable ordinary individuals adversely affected by a statutory or contractual limitation, restriction or exclusion of civil liability cover that is not permitted by the Directive to invoke the superior authority of the Directive’s legislative aim to ground a civil claim against the relevant authorised compensating body (in the UK, the MIB) and to secure redress.  In practical terms it enables individuals to invoke the wording of the Directive directly against the MIB, as though the directive was a domestic statutory provision.  Ordinarily, EU directives do not have direct effect in this way but EU law has developed certain exceptions to the rule to prevent member states from evading their responsibilities and to ensure the effectiveness of this form of secondary legislation.  This has been extended to embrace bodies that are not obviously part of central government (such as the MIB) in certain specific circumstances[6].  There is a growing body of evidence to suggest that these circumstances apply to the MIB’s role in compensating victims of uninsured and unidentified vehicles.
·         In consequence of the above the MIB faces potential additional liabilities resulting from:
§  The nullification of various provisions within the MIB agreements which purport to confer on the MIB an entitlement to restrict, limit or exclude liability in circumstances that are not permitted by the Directive[7];
§  The direct effect of Articles 10 and 23 to 25 of the Directive itself, independently of the UK legislative framework for compulsory third party motor insurance and / or the MIB agreements themselves.  This could expose the MIB to a new liability to compensate for loss or injury caused by incidents that do not currently fall within the scope of the UK insurance requirement as defined by Part VI of the Road Traffic Act 1988, namely: (i) the use of unusual ‘off-road’ transport and motor vehicles; (ii) the use of vehicles on private land and (iii) claims arising out of a vehicle defect not caused or contributed by the user or owner’s negligence but by virtue of some other third party[8], product or software defect.
·         In practical terms the potential impact of the EU law doctrine of direct effect would be to severely restrict the MIB’s ability to avoid or limit its liabilities under its existing arrangements as well as fixing the MIB with an autonomous liability to compensate victims sustaining loss or injury caused by motor vehicle use on private property or otherwise from motor vehicles which, hitherto, were not thought to be subject to the insurance requirement prescribed by Article 3 of the Directive.

[1] The analysis in this section of Part 9 are the views of Dr Nicholas Bevan, its author.  His views are explained in greater depth in the following articles: Nicholas Bevan, ‘Mind The Gap’, British Insurance Law Association Journal, January 2016 and Nicholas Bevan, ‘Bridging The Gap’, British Insurance Law Association Journal, March 2016
[2] See Nicholas Bevan, Putting wrongs to rights, Part I: New Law Journal, 27 May 2016 and Part II of 3 June 2016
[3] See Nicholas Bevan, ‘Bridging The Gap’, British Insurance Law Association Journal, March 2016.  Note also the fact that the MIB owes its existence to the principal agreement dated 31 December 1945 between the Minister for War Transport and every motor insurer authorised to conduct sell motor insurance in the UK whereby the state required the formation of a compensating body, funded by the industry and subject to such terms as the minister might from time to time impose on it.   Although the parties have changed many times, the agreement was never terminated and, it is reasonable to suppose that its essential nature is preserved at the very least as an informal understanding and modus operandi that informs the present relationship between the Secretary of State for Transport and the MIB.
[4] i.e. (i) the state’s influence over and control of the MIB as well as (ii) the state’s control over the public services it discharges
[5] (Case C-106/89) Marleasing SA v La Comercial Internacional de Alimentacion SA [1990] ECR I-4135 as developed by (Case C-397/01) Bernhard Pfeiffer et al v Deutsches Rotes Kreuz, Kreisverband Walshut eV [2004] ECR I-8835
[6] See the references to (Case C-188/89) Foster v British Gas below.
[7] Take for example the unlawful exclusions of liability for loss or injury caused by acts of terrorism or damage to uninsured vehicles; both removed for this reason with effect from 1 March 2017 but not retrospectively, and the purported exclusions of liability under the Untraced Drivers Agreement 2003 for failing to report the incident giving rise to the claim in clause 4 (3) that the MIB wrongly seek to apply to any incident predating 1 March 2017.
[8] E.g. garage mechanic or software manufacturer or ICT technician