The end of the road for the MIB

After a long running court battle, the Motor Insurance Bureau (MIB) has reached the end of the road in its quest to avoid liability for accidents on private land that involve uninsured vehicles.

The Supreme Court has rejected the MIB’s application to appeal the Court of Appeal ruling in Motor Insurers’ Bureau v Lewis [2019] EWCA Civ 909; and the case will not be referred to the Court of Justice of the European Union for a further ruling.

What’s the background?

In 2013, the 67-year-old claimant was walking on a farmer’s private land with friends in Lincolnshire. The farmer wrongly thought he had been up to no good around the farm premises so he pursued the group in his 4x4 vehicle which was uninsured. Eventually, he drove across a field and collided with the claimant.

The claimant was left with tetraplegia and permanent brain damage and brought an injury claim. The MIB was involved as the farmer had insufficient funds to meet the compensation claim. The MIB did not dispute that the farmer was liable for the accident. However, it denied having any contingent liability to the claimant under the Uninsured Drivers Agreement (UDA) 1999 because the accident and injuries were not caused by or arising out of the use of the vehicle on a road or other public place under section 145 of the Road Traffic Act 1988.

In the High Court, Mr Justice Soole ruled that any judgment awarded against the farmer was not a liability required to be insured under Part VI of the Road Traffic Act. However, he found that Article 3 of the Motor Insurance Directive did give the claimant a right to be compensated, irrespective of whether the vehicle used was on private land (the RTA not encompassing that right). The MIB should therefore pay the compensation.

The Court of Appeal set out the domestic and EU legal framework; and previous ECJ rulings – most notably Farrell v Whitty (No 2) on which the Court of Appeal heavily relied. Article 3 of the 2009 Directive requires each Member State to “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 insurance referred to in the first paragraph shall cover compulsorily both damage to property and personal injuries”.

Furthermore, the CJEU has made it unequivocal that the obligation of compulsory insurance extended to the use of vehicles on private land (Vnuk v Zavarovalnica Triglav dd (Case C-162/13) and in subsequent authorities).

The appeal court found that the UK government had not met its obligation under Article 3 to ensure that civil liability in respect of the use of motor vehicles on private land is the subject of a scheme of compulsory motor insurance.

The government was also found to have failed to comply with its obligation under Article 10 to assign responsibility for meeting that liability to the compensation body contemplated by that Article – ie the MIB.

The MIB’s argument that the government retained a discretion to delegate the residual liability to compensate those injured by uninsured vehicles on private land to a compensation body other than the MIB was soundly rejected.

Therefore, the claimant’s right to compensation was directly effective and enforceable against the MIB under Article 3– the language of which was, said Lord Justice Flaux, unconditional and precise.

As ‘an emanation of the state’, the MIB was compelled as the designated compensation body to meet compensation claims in such circumstances.

The mischief to be remedied

The failure effectively to be remedied was “a gap in the insurance cover compulsorily required by the domestic legislation and a corresponding gap in the protection of the victims of motor accidents, which, as is clear from all the CJEU jurisprudence, is the very mischief that the Motor Insurance Directives are designed to avoid. The suggested distinction between the use of a motor vehicle on a road or other public place and the use of a motor vehicle on private land is, at least on the facts of the present case, a wholly artificial one...”

Flaux LJ went on to say it was clear from the judgment in Farrell that the compensation body (the MIB in Lewis) is intended to protect and compensate victims by remedying the failure of the Member State to fulfil its obligation under Article 3 to ensure that civil liability in respect of the use of motor vehicles is covered by insurance. The CJEU jurisprudence makes clear that obligation includes the use of vehicles on private land.

He also pointed out that the MIB has special powers under the RTA obliging all authorised motor insurers to be members of the MIB and to contribute to its funding. Any argument that such a levy doesn’t oblige insurers providing off-road cover to contribute to the levy is an issue that can be dealt with by amending the RTA and/or the MIB Articles of Association.

Following the Supreme Court’s rejection of the MIB’s appeal, Mark Hemsted, a member of the Forum of Insurance Lawyers and a partner at Clyde & Co said:This decision reiterates the extension of the obligations of the MIB beyond those within the RTA and within its own Articles of Association. The MIB may now seek to challenge the government into amending the Road Traffic Act. In the continued absence of any indication that the government intends on amending the RTA, it would be unsurprising if the MIB does not make efforts to amend its Articles to reflect the changes brought about this decision.”

The MIB said after the ruling that it is exploring its option.


Posted on 21.04.20