Wilkinson v Fitzgerald and Another
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Blair |
| Judgment Date | 11 June 2009 |
| Neutral Citation | [2009] EWHC 1297 (QB) |
| Court | Queen's Bench Division |
| Docket Number | Claim No: 7MA91096 |
| Date | 11 June 2009 |
[2009] EWHC 1297 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
MANCHESTER DISTRICT REGISTRY
Before: He Hon. Mr. Justice Blair
Claim No: 7MA91096
Stephen Grime QC (instructed by Potter Rees) for the Claimant
The First Defendant was not present or represented
Stephen Worthington QC and Fergus Randolph QC (instructed by Keoghs Solicitors) for the Second Defendant
Approved Judgment
Hearing dates: 20 and 21 May 2009
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
THE HON. MR. JUSTICE BLAIR
Mr. Justice Blair :
This is the trial of a preliminary issue. It concerns the statutory liability of an insurer to satisfy a judgment obtained against a driver who was not insured by the policy. UK domestic legislation gives the insurer a right of recovery against an insured person who caused or permitted the use of the vehicle. The Claimant argues that this right of recovery is incompatible with his rights as a road accident victim under various EC/EU. I am told that there is no authority on this point, which appears not to have been argued before. It is however plainly a point of some general importance.
For present purposes, the facts are agreed. In October 2004, Mr. and Mrs. Wilkinson, the Claimant's parents, bought their son a car for £1,600. The car was insured through Churchill Insurance Company Limited, the Second Defendant. The policy holder was Mrs. Wilkinson, but the Claimant was a named driver. On 23 November 2005, he met with a couple of friends, one of them being the First Defendant, who had been drinking. The Claimant, who had not been drinking, drove them to a local Macdonalds, where they had something to eat. When they left, the Claimant allowed the First Defendant to drive the car, although (for present purposes) it is accepted that he knew he was not insured under the policy. Unfortunately, the First Defendant lost control, and the car collided with a vehicle driving in the opposite direction. The Claimant, who was aged 20 at the time, suffered severe injuries. I am told by his Counsel (though this is not an agreed fact) that he has no memory of the events surrounding the accident. The First Defendant was subsequently convicted of dangerous driving, driving with excess alcohol and driving without insurance.
The Claimant wanted to recover damages for his injuries. But on 2 February 2007, his mother got a letter from the Defendant insurance company which informed her that as a consequence of the Claimant causing or permitting the use of the vehicle by the First Defendant, the company had a right of recovery against the Claimant pursuant to s. 151(8) Road Traffic Act 1988. As a consequence it was said that:
“Ben [the Claimant] will be entitled to pursue a claim against [the First Defendant] in a personal capacity. Theoretically Churchill Insurance might be required to satisfy such a claim. However, this would be rendered meaningless as Ben would be required to reimburse all such payments on the same basis, namely that he caused or permitted the use of the vehicle by [the First Defendant] in the first place”.
These proceedings were begun on 9 November 2007. Judgment has been entered by the Claimant against the First Defendant with permission for the Defendants to raise contributory negligence at the quantum stage. The Second Defendant pleads contributory negligence on the basis that the Claimant knew or should have known the First Defendant had been drinking with the result that his ability to drive was or was likely to be impaired.
By Order of 17 July 2008, District Judge Gosnell ordered the trial of a preliminary issue between the Claimant and the Second Defendant as follows:
(a) Whether the Second Defendant must indemnify the First Defendant in respect of the Claimant's claim; and
(b) Whether the Second Defendant has any right to recover such amount from the Claimant pursuant to Section 151(8) of the Road Traffic Act 1988 or otherwise”.
As I shall explain, the first point is not in dispute. The Defendant insurance company accepts not only that it “might” have to indemnify the First Defendant in respect of the Claimant's claim (as was said in the letter of 2 February 2007), but that it does have to do so. But as foreshadowed in the letter, it does not accept that the Claimant should receive the money. It claims to be entitled to recover the money under s. 151(8). The effect of this set off and counter claim is said to be a circuity of action, with the result that the Claimant's claim fails. The Claimant submits that this is wrong. He says that such an outcome contravenes the provisions of certain EC directives and in particular the Second Council Directive of 30 December 1983 on the approximation of the laws of the Member States relating to insurance against civil liability in respect of the use of motor vehicles (84/5/EEC). He argues that the right of recoupment given by the UK legislation has to give way to the effect of European law.
The legislative background
Counsel described English law when it comes to compensation obligations in respect of injury caused by negligent driving as something of a hotchpotch. Three bodies are potentially liable: (1) contractual insurers, which cover the vast majority of cases, (2) statutory (sometimes called the RTA) insurers whose liability arises because legislation so stipulates, though there would be no contractual liability, and (3) the Motor Insurers Bureau (MIB), which since its establishment in 1946 has provided a safety net which now operates principally where there was no insurance at all or where the driver is not identified. The background is explained by Lord Nicholls in White v. White [2001] 1 WLR 481 at [4] – [6]. While the overall aim is that compensation should be paid to injured parties by one or other of the bodies, it is further right that (as the Second Defendant has demonstrated) insurance companies have had certain rights of recovery against an insured for sums which they have been obliged to pay out under provisions of the Road Traffic legislation going back to s. 38 of the first Act in 1930.
When the United Kingdom joined what was then the European Economic Community, it became subject to various Directives which were concerned with insurance against civil liability in respect of road accidents. As the Claimant put it, in a single economic area where vehicles operate across frontiers, it is not acceptable to have potential disparities between motor insurance cover. There are now four such Directives, the first (72/166/EEC) dating from 1972. The particular purpose of the First Motor Insurance Directive was to reduce the disparities between insurance arrangements in different Member States as these could affect the free movement of vehicles goods and persons. Its aim was to provide for compulsory insurance of vehicles in all States to at least a minimum level. Article 3 states:
“1. Each Member State shall …. 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. The extent of the liability covered and the terms and conditions of the cover shall be determined on the basis of these measures.”
The Second Motor Insurance Directive
The argument in the present case has centred on the Second Motor Insurance Directive (84/5/EEC). As the Claimant puts it, the Second Motor Insurance Directive took the process further by seeking to ensure the widest protection for accident victims under the differing national regimes. The following recitals of the Directive are relevant:
“Whereas the amounts in respect of which insurance is compulsory must in any event guarantee victims adequate compensation irrespective of the Member State in which the accident occurred;”
“Whereas it is in the interest of victims that the effects of certain exclusion clauses be limited to the relationship between the insurer and the person responsible for the accident; whereas, however, in the case of vehicles stolen or obtained by violence, Member States may specify that compensation will be payable by the abovementioned body;”
The “aforementioned body” is that mentioned in the previous recital as the “body to guarantee that the victim will not remain without compensation where the vehicle which caused the accident is uninsured or unidentified….”, which in the case of the UK is the MIB.
One then comes to the provision that is central to the Claimant's submissions. Article 2 provides as follows:
“1. Each Member State shall take the necessary measures to ensure that any statutory provision or any contractual clause contained in an insurance policy issued in accordance with Article 3 (1) of Directive 72/166/EEC, which excludes from insurance the use or driving of vehicles by:
- persons who do not have express or implied authorization thereto, or
- persons who do not hold a licence permitting them to drive the vehicle concerned, or
- persons who are in breach of the statutory technical requirements concerning the condition and safety of the vehicle concerned,
shall, for the purposes of Article 3 (1) of Directive 72/166/EEC, be deemed to be void in respect of claims by third parties who have been victims of an accident.
However the provision or clause referred to in the first indent may be invoked against persons who voluntarily entered the vehicle which caused the damage or injury, when the insurer can prove that they knew the vehicle was stolen.
Member States shall have the option – in the case of accidents...
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Churchill Insurance Company Ltd v Fitzgerald & Wilkinson
...the insured driver's civil liability under the applicable civil liability rules". 44 Interestingly, although the CJEU had restated in the Wilkinson case its rule that it was not the business of the CJEU to interpret national legislation and assess its effect, 45 in Lavrador the Court appear......