Daniel James Colley v Motor Insurers' Bureau
| Jurisdiction | England & Wales |
| Judge | Stuart-Smith LJ,Warby LJ,Holroyde LJ |
| Judgment Date | 22 March 2022 |
| Neutral Citation | [2022] EWCA Civ 360 |
| Docket Number | Case Nos: CA-2021-000457 (formerly B3/2021/0345) |
| Court | Court of Appeal (Civil Division) |
[2022] EWCA Civ 360
Lord Justice Holroyde
Lord Justice Stuart-Smith
and
Lord Justice Warby
Case Nos: CA-2021-000457 (formerly B3/2021/0345)
CA-2021-000516 (formerly B3/2021/0562)
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
MANCHESTER DISTRICT REGISTRY
MR JUSTICE FREEDMAN
E90MA082
Royal Courts of Justice
Strand, London, WC2A 2LL
Thomas de la Mare QC and Jason Pobjoy (instructed by Weightmans LLP) for the Appellant
Philip Moser QC and Philip Mead (instructed by Irwin Mitchell LLP) for the Respondent
Hearing dates: 2–3 February 2022
This judgment was handed down remotely at 10.30am on 22 March 2022 by circulation to the parties or their representatives by email and by release to BAILII and the National Archives.
Approved Judgment
Introduction
Is the obligation of the Motor Insurers' Bureau (“the MIB”) that arises under Articles 3, 10 and 12 of Directive 2009/103/EC (“the Codified Directive”) an obligation limited to providing compensation where there is an unidentified vehicle or a vehicle in respect of which there is no policy of insurance in being at the time of the incident giving rise to liability? Or does the obligation also extend to a case where there is a policy of insurance in being at the time of the incident giving rise to liability, but that policy is subsequently avoided ab initio?
The answer to these questions and the determination of this appeal depends upon the meaning to be attributed to the words “covered by insurance” in Article 3(1) of the Codified Directive. Those words determine the extent of the insurance obligation imposed upon the Secretary of State by Article 3(1) and whether that obligation has or has not been satisfied. The Codified Directive was preceded by five other Directives between 1972 and 2005. Most of the relevant authorities considered the terms of one or more of the preceding Directives. I shall refer to the obligation that now arises under Article 3(1) of the Codified Directive as “the Article 3 insurance obligation” and to the body that was originally required to be set up by Article 1(4) of the Second Directive (now Article 10(1) of the Codified Directive) as “the compensation body”. In the United Kingdom, the MIB is the compensation body.
In a careful and detailed judgment Freedman J concluded that the MIB's obligation under the Codified Directive covers a case where there is a policy of insurance in being at the time of the incident giving rise to liability but that policy is subsequently avoided ab initio; and that it gives rise to a direct right of action by a victim against the MIB, which he held to be an emanation of the state for these purposes: [2020] EWHC 3433 (QB), [2021] 1 WLR 1889. He therefore held the MIB liable to the Claimant, Mr Colley, in respect of the injuries he suffered when travelling as a passenger in a vehicle being driven by the first Defendant, Mr Dylan Shuker. At the time of the accident there was an insurance policy in existence issued by UK Insurance Ltd [“the Insurer”]; but that policy was subsequently avoided ab initio, in circumstances to which I will return.
The MIB now appeals against Freedman J's decision. It contends that the vehicle in which the Claimant was travelling was not “uninsured” within the meaning of the Codified Directive. It submits that therefore the facts of the present case do not fall within the scope of the MIB's obligation to provide compensation pursuant to the Directive. The MIB accepts that (a) it is an emanation of the state for these purposes and (b) that the obligation in question is directly enforceable, whatever its scope may be. The issue is about the scope of the obligation.
I have come to the conclusion that the Judge's decision was correct, for the reasons I set out below.
The factual and procedural background
The accident
On 27 March 2015 Mr Colley was a passenger in a car being driven by Mr Shuker [“the Vehicle”] when, by reason of Mr Shuker's negligence, an accident occurred which caused Mr Colley to suffer catastrophic injuries. Mr Shuker was the registered keeper of the vehicle. His father had taken out a policy of insurance with the Insurer [“the Policy”]. It named the father as Policyholder and Main Driver of the Vehicle and his partner as the Other Driver. The Policy did not provide cover for Mr Shuker himself to drive the Vehicle as he was not a named driver. He was therefore uninsured at the time of the accident. Mr Colley knew before he entered the Vehicle that Mr Shuker did not have a valid driving licence and was not insured to drive the vehicle.
Mr Colley has brought these proceedings against four defendants.
The claim against Mr Shuker
Mr Colley sued Mr Shuker as first defendant. On 10 June 2020, judgment was entered against Mr Shuker for damages to be assessed, subject to the issue of contributory negligence. It is to be assumed that Mr Shuker is not in a position to satisfy any significant award of damages. Hence the need to join other Defendants.
The claim against the Insurer
Subject to s. 152(2), which I set out below, s. 151 of the Road Traffic Act 1988 [“the Act”] makes provision for an insurer that has issued a policy to pay to a person who is entitled to the benefit of a judgment (such as that obtained by Mr Colley against Mr Shuker) any sum payable under the judgment as regards liability in respect of death or bodily injury. Subject to s. 152(2), therefore, Mr Colley would be entitled to look to the Insurer to satisfy any judgment for damages that he obtains against Mr Shuker.
After the accident but before these proceedings were issued the Insurer sought and, on 27 June 2016, obtained a declaration against Mr Shuker's father that it was entitled to avoid the Policy on grounds of material misrepresentation. The misrepresentation upon which the Insurer relied was that Mr Shuker's father had stated wrongly that he was the registered keeper of the Vehicle and that the only drivers of the Vehicle would be himself and his partner.
Pursuant to the provisions of s. 151 and 152 of the Act as they then stood, this declaration released the Insurer as a matter of English law from any obligation arising under s. 151 of the Act to make payment to Mr Colley in respect of any award of damages he may subsequently obtain against Mr Shuker. That was because, as it then stood, s. 152(2) provided that:
“… no sum is payable by an insurer under s.151 of this Act if, in an action commenced before, or within three months after, the commencement of the proceedings in which the judgment was given, he has obtained a declaration— (a) that, apart from any provision contained in the policy or security, he is entitled to avoid it either under the Consumer Insurance (Disclosure and Representations) Act 2012 or, if that Act does not apply, on the ground that it was obtained— (i) by the non-disclosure of a material fact, or (ii) by a representation of fact which was false in some material particular, or (b) if he has avoided the policy under … that Act or on that ground, that he was entitled so to do apart from any provision contained in the policy …” (Emphasis added)
It is common ground that this provision was not compliant with the terms of the Codified Directive and that, to that extent, the Secretary of State was in breach of Articles 3(1) and 13(1) of the Codified Directive, which I set out at [18] below. The problem that gave rise to the breach was remedied by the amendment of s. 152(2) on and from 1 November 2019 so that an insurer is now only able to avoid its liability under s. 151 if it obtains the s. 152 declaration “before the happening of the event which was the cause of the death or bodily injury or damage to property giving rise to the liability … .” This amendment was prospective only. It did not apply to or assist Mr Colley in his claim against the Insurer.
Undaunted by the fact that the Insurer had obtained its declaration, Mr Colley joined the Insurer as second defendant, alleging that the Insurer was liable to compensate him by the operation of EU law. His claim against the Insurer was struck out by the judgment and order of O'Farrell J on 5 March 2019. O'Farrell J held that the words of s. 152(2) before amendment were clear and provided the Insurer with a complete defence; and that, although the words of s. 152 were incompatible with the Secretary of State's obligations under the Codified Directive, the Codified Directive has no horizontal effect in respect of a private individual or other entity that is not an emanation of the state. Accordingly:
“The claim made by the claimant is against the second defendant, a private entity, to enforce rights arising out of the Directive. It does not assert directly enforceable rights against the second defendant as an agent of a Member State. Therefore, there is no obligation on the court, or power, to disapply the domestic legislation.”
It is not suggested by any party that O'Farrell J was wrong in her conclusion and, in my judgment, she was clearly right for the reasons she gave. What is more, her decision was made in the present proceedings and has not been appealed. It is therefore binding on the parties to the present proceedings, including the MIB and the Secretary of State.
The claim against the Secretary of State
In March 2019, Mr Colley added the Secretary of State as fourth defendant. His claim against the Secretary of State is for Francovich damages and arises if he has no remedy against either the Insurer or the MIB. In that event, Mr Colley submits that the Secretary of State has unlawfully failed to implement the Codified Directive and is therefore in breach of statutory duty arising under the European...
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