James Marson (Reader in Law, Sheffield Hallam University), Katy Ferris (Assistant Professor in
Business Law, Nottingham University Business School) and Neil Fletcher (Senior Lecturer, Sheffield Hallam University)
Introduction
Remedies for a Member State’s
breach of EU law includes liability in damages. State liability has experienced
notable
successes in UK jurisprudence, but, generally, has also demonstrated
limitations in holding the State to account for losses suffered by individuals.
Establishing a ‘sufficiently serious’ breach of the law is frequently the
limiting factor. However, in motor vehicle insurance law several state liability
successes have been achieved, principally due to the UK’s flagrant breach of
the Motor
Vehicle Insurance Directives (MVID). The UK’s transposing laws in this area
include provisions in the Road Traffic Act
1988 (RTA88) and two agreements concluded between the UK and the Motor
Insurers’ Bureau (MIB) - the Untraced
Drivers Agreement 2017 and the Uninsured
Drivers Agreement 2015 (along with its Supplementary Agreement 2017). The
UK has been, and continues to be in breach of both
Agreements. There are also aspects of the RTA88 where English law has not
caught up with developments in the MVID. The most recent breach has been the
requirement, established in the 2014 judgment of the Court of Justice of the
European Union (CJEU) in Vnuk, that
vehicles used exclusively on private land are subject to compulsory third party
motor insurance. The MIB has, since the ruling, rejected the view that
compulsory insurance extends to vehicles on private land. However, the High
Court has recently ruled in Lewis v Tindale
that the CJEU decision must be applied in the UK despite the restrictive
wording of the RTA88.
The Lewis
ruling applies until Brexit day
when, if the UK leaves without an agreement to remain in the Single Market,
national law will lawfully be able to retain its literal and restrictive reading
of the RTA88. Contrasting approaches, and the inconsistency present in the interpretation
of the RTA88 through national courts, can be seen in the most recent case on
the subject. In R & S Pilling v UK
Insurance the Supreme Court considered the issue of the ‘use’ of a vehicle.
Whilst its conclusion was reasonable and pragmatic in the circumstances of the
case, the decision of the Supreme Court was interesting in its refusal to apply
EU law and to extend the reading of the RTA88. This, we have argued previously, would be possible
without a breach of national law, and indeed according
to EU law, is a requirement of national courts. The ruling did lead Lord
Hodge, providing the only judgment, to remark that in relation to accidents on
private property, national law must apply despite an expansive interpretation
being provided by the CJEU. Lord Hodge did continue, however, that those CJEU
rulings did ‘demonstrate a need for Parliament to reconsider the wording of
section 145(3)(a) of the RTA to comply with the Directive.’
Given the UK’s reluctance to
comply with EU law in this area, Brexit will remove many crucial protective
rights enjoyed by third party victims of motor vehicle accidents. The only
safeguard against the UK’s continuing breach of EU law is membership of the EU.
There are so many breaches of the law (some highlighted in the Roadpeace
case and accepted by the High Court, others dealt with in cases including Delaney v
Pickett at the Court of Appeal) that those protections that should be
available at present, but which are not, will never be achieved once Brexit has
been concluded. Further, the remedy which has at least provided some scope for
redress, state liability, will also be lost following the UK’s withdrawal from
the EU.
Motor Vehicle Insurance Extending its Reach?
It is well known that under English
national law owners must possess, as a minimum, third party motor vehicle
insurance. This applies to vehicles used on a road or other
public place. For the purposes of the law, a public place includes campsites
and caravan parks, pay and display car parks, and even dockyards. This seems
reasonable. If you use a motor vehicle in a place where people may visit and
share the facility with you, for everyone’s safety its owner should ensure
there is insurance coverage in case of injury following an accident. The law of
England (the Road Traffic Act 1930 being the inspiration for the First MVID)
originally made provision for insurance to be held for vehicles used on a road.
This was then, begrudgingly, extended through amendment of the RTA88 to include
those ‘public places’ (as mentioned previously) following a decision of the Court of Appeal.
However, the courts rejected the application of compulsory insurance to
vehicles used exclusively on private land (vehicles used, for example tractors
on farm land, which did not travel on a road or other public place). However, in
late 2018, the High Court ruled that the requirement for compulsory motor
insurance does now apply to vehicles used exclusively on private land.
The European Union Interpretation
In its 2014 judgment in Vnuk, the CJEU
held that a farmworker in Slovenia could claim compensation when he was injured
as a result of the negligent driving of a tractor and trailer. This was despite
Slovenian law not requiring such vehicles to be insured (here the tractor was
used exclusively on the farm and was never used on a public road). Slovenia
considered that the term ‘vehicle’ in its laws did not include a tractor for
the purposes of its statutory interpretation. The Court of Justice considered
that in reference to the MVID,
the phrase ‘use of vehicles’ (Art 3(1)) meant any use of a vehicle consistent
with its ‘normal function.’ Thus the requirement for which ‘vehicles’ are,
across the EU, subject to compulsory insurance was significantly widened.
The issue relating to the
requirement to insure vehicles on private land is not new (the Vnuk judgment
having been issued in 2014). In 2006 two cases heard in references by courts in
Portugal addressed this issue. In the first (Juliana), a driver killed himself and
his two passengers whilst using his mother’s (Mrs Juliana’s) car. The vehicle
had been taken without the mother’s consent. The insurance cover had lapsed
following the deterioration of the mother’s health and, whilst it was still
registered under the mother’s name and in working condition, it had been stored
on private land. Given the lack of insurance, the Portuguese national insurance
body paid the compensation due to the victims’ families and then brought civil
proceedings against Mrs Juliana, as owner of the vehicle, to recover its costs.
The case before the CJEU was whether a vehicle, kept on private land and not
intended to be used, was subject to the requirement to be insured.
The second case (Andrade)
involved the use of a tractor, stationary at the time of the accident, but
being used to spray herbicide. The tractor slipped down a hill in a vineyard -
having itself caused a landslip - and this led to an employee working at the
site being crushed to death. The Portuguese law only required insurance to
cover accidents caused by the movement of the vehicle. The CJEU was called upon
to address the issue of whether EU law necessitated the insurance of vehicles
even when they were stationary but with the engine running.
In Juliana,
the CJEU, issuing its ruling in late 2018, held
a vehicle
which is not formally withdrawn from use and which is capable of being driven
must be covered by motor vehicle insurance against civil liability even if its
owner, who no longer intends to drive it, has chosen to park it on private land.
This was a reasonably foreseeable
interpretation of the law. In Andrade, decided
in 2017, the CJEU looked again at Vnuk and the
determination of the ‘use of vehicles’. It reiterated the concept of a
vehicle’s ‘use’ but also explained that such a concept was not dependent on the
characteristics of the terrain where the vehicle is used. It further included
any use of it as a means of transport (whether stationary, moving, its engine
running or off). On the issue of where a vehicle may be used as both a means of
transport and a machine for the purposes of carrying out work, it had to be
determined if, at the time of the accident, it was being used principally as a
means of transport.
In Andrade,
it was not contested that the tractor, when used normally as a means of
transport, was a ‘vehicle’. Instead, the CJEU considered that at the time of
the landslip the tractor was not a ‘vehicle in use’ as it was not being ‘used
principally as a means of transport.’ This was because its engine was not being
used to create power to provide transport but instead to ‘drive the pump of the
herbicide sprayer.’
The CJEU concluded that damage
caused by vehicles which are also intended to be used as machines for carrying
out work must only be covered by compulsory motor-vehicle insurance against
civil liability when such vehicles are being used principally as a means of
transport. Accordingly, the widower of the deceased was unable to recover
compensation from the motor-vehicle insurers of the tractor.
English law has not caught up
with the Vnuk ruling
through changes to the RTA88. The protection of third-party victims of non-road
registered vehicles (such as quad-bikes or vehicles used in purely
agricultural, construction, industrial, motor sports or fairground activities)
remain beyond the scope of compulsory insurance. Many of these vehicles are
being used for the purposes of transport, and not necessarily for work
(although it is important to note that the MVID do not impose a requirement of
the use of vehicles for transport and presumably further cases will be needed
to determine ‘work’ and ‘transport’ – motor racing for instance). The EU and
national laws in this respect are, as a consequence, misaligned and this is
significant. The UK Department for Transport does not report on statistics of
accidents occurring on private land involving motor vehicles. What has been reported
upon in the UK Parliament is the consequence of this omission for the
possible prosecution of individuals who evade current laws – such as driving
whilst under the influence of alcohol.
The UK Approach
English law is clear on the
requirement for third party victims of motor vehicle accidents to be protected.
Not only was the original Road Traffic Act the source of inspiration for the
first MVID, the UK has a compensatory body (the MIB) established to satisfy
claims where the at-fault driver is not insured or cannot be traced. The UK
does permit some vehicles to use a road or public place without insurance. Such
exclusions are, of course, very limited and typically apply to those owned and
used by a State body and thus would have recourse to funds to satisfy claims by
the victims of accidents. Vehicles currently exempted from the RTA88 (through
Art. 5 MVID) and its requirement to hold compulsory motor vehicle insurance
will now fall within the category of ‘vehicles’ following Vnuk
and will have to carry insurance. Further, the UK, under s.185 RTA88,
provides a definition of the meaning of ‘motor vehicle’ which is too
restrictive to comply with the MVID.
That there is clear direction
from the CJEU as to the interpretation of an EU Directive, and Member States (even
those subject to withdrawal) are required to consistently apply such an
interpretation, has not stopped the UK courts from being dismissive of rulings
they don’t like. To extend the issue of motor vehicle insurance in question for
just a moment, consider the inclusion within the RTA88 of a list which, if used
by an insurer in an attempt to exclude the cover of the policy, will be held
void. This includes ‘matters’ such as the age of the vehicle, its weight or
horsepower etc. Its aim was to stop insurers shirking their responsibilities to
compensate victims of road traffic accidents. The list was a common sense
approach to preventing insurers from escaping responsibility if, for instance,
a car with five seats was involved in an accident whilst at the time containing
six individuals (Houghton v Trafalgar Insurance Company, Ltd. [1953] 2 Lloyd's
Rep. 18). Any third-party victims of an accident involving this vehicle should
not find themselves unable to seek compensation because of such a
transgression. However, in EUI v Bristol
Alliance Partnership the Court of Appeal interpreted this provision
restrictively and held the list as exhaustive. Hence any exclusion not
expressly contained in s. 148(2) RTA88
was, by definition, permissible under English law. This granted significant
scope to motor insurers to escape responsibilities outside of the s. 148(2)
list.
This is particularly worrisome due to the jurisprudence of
the CJEU on this issue, and which was available to the Court when making its
judgment. The CJEU had in Bernaldez,
Correia
Ferreira v Companhia de Seguros Mundial Confiança SA, Candolin
v Vahinkovakuutusosakeyhtio Pohjola, Farrell
v Whitty, and Churchill
v Wilkinson and Tracey Evans been consistent that there exists only one
permissible reason for excluding a third party’s right to claim against a
policyholder’s insurers. This is where the third party knew (and this knowledge
may not be inferred) that the vehicle in question was stolen. The CJEU
purposively interpreted the list of void exclusions provided in Art.2(1) of the
Second MVID (now contained in Art.13(1) of the Sixth MVID) as being
illustrative. This allowed for the extension of the scope of the civil
liability insurance requirements contained in Art.3(1) of the First MVID.
This is but one example of an inconsistent approach to the
interpretation and application of EU law and principles by English courts. Some
are favourable to a consistent application of EU laws (see Allen v Mohammed and Allianz Insurance (2016), Lawtel, LTL
25/10/2016) whilst others, heard at the same time but in a different part of
the country, are
not and adhere steadfastly to national provisions.
This lack of consistency and legal
certainty left the implications of the Vnuk ruling,
along with effects of Brexit hanging over the legal system, in a state of
paralysis. At least until towards the end of 2018.
‘New’ Rights and Obligations in 2019?
In September 2018, the High Court
delivered its judgment in Lewis v Tindale
where the claimant suffered very serious injuries having been run over by a
driver on private land. The driver of the vehicle was uninsured and therefore
the claimant had to seek compensation from the MIB. The MIB acts as the insurer
of last resort and a percentage of every motor policy-holder’s insurance
premium is paid into its funds to satisfy claims. The High Court considered the
MIB to be an ‘emanation of the State’ and therefore subject to the requirements
of EU law – beyond what national law may provide. A consequence of the judgment
is that the MIB is responsible for compensating the third-party victims of
motor vehicle accidents occurring on private land and, where it refuses due to
adherence to the RTA88, will be subject to state liability claims and the
vertical direct effect of the MVID. This situation is likely to be untenable
and thus legislation will be necessary – if for no other reason than to prevent
the MIB being called upon to satisfy claims. As mentioned previously, insurance
will also extend to a whole new suite of vehicles which previously have never
been required to possess liability cover.
It also calls into question the
role that the police will have to enforce the cover of vehicles which are not
on the road or necessarily subject to regulation (as applies to vehicles which
access roads and public places). It will allow for prosecutions
of drivers of vehicles where injuries (and deaths) have occurred on private
land but are, at present, excluded from the scope of criminal sanctions.
Further, the requirement for compulsory insurance means that at present those
vehicles in public places are subject to the rules relating to the use of a
vehicle. This is to be insured and a criminal offense is committed by the owner
allowing the car to be uninsured. This should now be applied to private land.
This indirect consequence of Vnuk and Lewis may give greater protection to
vulnerable pedestrians and improve safety measures which seem to have a
loophole in protection. However, as Lewis
does not include use of a vehicle for ‘work’, it will bypass the Andrade hurdle
relating to compulsory insurance. That being said, clearly the vehicle’s use as
‘transport’ was surely merely ancillary to its main purpose for catching and
injuring the victim. Thus, is this the normal use of a vehicle (Vnuk)? Is
the vehicle being used as a means of transport (Andrade)?
There are perhaps bigger questions to this case than covered by the High Court.
At the very least, the law as
developed through Vnuk is due
to be clarified by the Court of Appeal when the case is heard in May 2019. The
UK’s future relationship with the EU will also largely determine what happens
next. If the UK remains in the EU, or strikes a deal to remain in the Single
Market, then owners of motor vehicles will be required to have these insured
against third-party liability. If the UK leaves or, for instance, establishes a
deal with the EU on the basis of a Customs Union arrangement, this may be an
area which is changed under the Government’s plans post-Brexit.
Whatever the eventual outcome, at
the EU level and through the ruling of the High Court, whether driving a buggy
on a golf course, or perhaps even a fork-lift truck (until Vnuk
and Andrade
are reconciled), you as the owner of the vehicle should possess liability cover.
In its absence, the MIB will have to settle compensation claims. Either way,
insurance premiums will be affected.
Photo credit: Insurance Times
Photo credit: Insurance Times
