17 JUN 2014
Motor Insurers' Bureau - Damages - Sean Robert Delaney v The Secretary of State for Transport  EWHC 1785 (QB)
High Court, Queen's Bench Division
Mr Justice Jay
3 June 2014
The exception clause 6(1)(e)(iii) of the Uninsured Driver’s agreement 1999, which excluded the MIB’s liability to passengers involved in 'criminal acts' was in breach of the UK’s obligations under EU Directives. The breach was sufficiently serious for the claimant to be entitled to Francovich damages.
On 25 November 2006, the claimant who was the front seat passenger of a vehicle driven by Shane Pickett suffered severe injuries in a road traffic accident due to the negligence of Mr Pickett. The claimant and Mr Pickett were both found in possession of cannabis. The claimant brought a claim against the driver’s insurers, Tradewise Insurance Services Ltd (“Tradewise”) who sought to avoid the policy pursuant to section 152(2) of the RTA 1988 Act on the grounds of non disclosure of material facts and misrepresentation. The claim effectively became an uninsured case to be dealt with by the Motor Insurers’ Bureau (“MIB”). Tradewise standing in the place of the MIB became the Article 75 insurers liable to meet the claim. However, when court proceedings were commenced against Mr Pickett and Tradewise, both claims were dismissed. It was held that the claimant’s claim was barred on grounds of public policy and the claimant knew or ought to have known that the vehicle was being used in the course or furtherance of crime, and therefore clause 6(1)(e)(iii) of the Uninsured Driver’s Agreement 1999 was applicable. The claimant appealed and his claim was dismissed on the clause 6(1)(e)(iii) issue. The claimant made a further claim for damages arising as a result of the Defendant being in breach o Article 1(4) of EU Directive 84/85.It was averred that the breach was sufficiently serious to entitle the claimant to Francovich damages under Community law principles.
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It was held that Article 1.4 of the Second Council Directive either read in isolation or conjunction with Article 3.1 of the First Directive, Article 2.1 of the Second Directive and Article 1 of the Third Directive, imposes obligations on Member States in respect of damage caused by vehicles in relation to which a valid policy of insurance was taken out, but where that policy was subsequently avoided by the nsurer. Article 1.4 and 2.1 of the Second Council Directive requires Member States to ensure that compensation is aid in all circumstances save those expressly set out as exclusions within the ext of these provisions. Ruiz Bernaldez, Case C-129/94, Candolin v Vahinkovakuutusosakeyhtio Pohjola, Case C-537/03 and Farrell v Whitty, Case-C356 applied and Csonka v Allam, Case C- 409/11 considered. The exception in clause 6(1) (e)(iii) was not consistent with and therefore does undermine the specific exceptions permitted by Articles 1.4 and 2.1 of the Second Council Directive. It follows that the UK, in the legal personification of this defendant, was in plain breach of EU law and the question of liability to pay compensation on Francovich principles therefore arose. It was concluded that the defendant was guilty of serious breach of Community law where its room for manoeuvre under the Directives was closely circumscribed. It did not have a wide discretion. Its obligations under the Directives and their relevant confines were quite clear – and in the absence of knowing the actual reason for this policy decision- the best that may be said is that the defendant decided to run the risk which was significant, knowing of its existence. It was held the claimant gave no thought to the question of whether the driver had insurance. The defendant was therefore liable to the claimant for any loss suffered as a consequence of this breach. The leading authority R v Secretary for Transport ex parte Factortame  1 AC 524 applied and Byrne v MIB and Secretary of State for Transport  EWCA Civ 574 considered.
This case identifies that relevant EU Directives clearly state that there are only certain limited exceptions to liability in these particular circumstances which the UK must adhere to; even if public attitudes would prefer for such claims to be barred due to some rule of public policy.