MIB v Lewis: MIB liable to cover vehicles being driven on private land
On 5th June 2019 the Court of Appeal handed down judgment in the case of Motor Insurers’ Bureau v Lewis  EWCA Civ 909. This judgment extends the scope of the MIB’s liability to indemnify uninsured drivers and creates an additional pool of cases, albeit a small one, which fall to be funded by the MIB and, consequently, motor insurers and their customers via the levy.
The facts and decision at first instance
The claimant, Mr Lewis, was walking on private land when they were struck by an uninsured 4x4 vehicle being driven by Mr Tindale. Mr Lewis sustained serious injury as a result of this accident and sued Mr Tindale, as tortfeasor, and MIB.
Mr Lewis obtained judgment against Mr Tindale and the key question at first instance was the extent to which, if any, MIB had any liability to satisfy the judgment obtained against the uninsured driver. This question was brought before Mr Justice Soole at a trial of preliminary issue.
Mr Justice Soole held that MIB were liable to indemnify the claimant, despite the accident occurring on private land, given that MIB were an “emanation of the state” for the purposes of the EU Motor Insurance Directives (‘the Directives’) thus extending MIB’s liability beyond the previously held boundaries of compulsory insurance as set out in the Road Traffic Act 1988.
The decision of the Court of Appeal
The Court of Appeal upheld the judgment of Mr Justice Soole in favour of the Claimant. LJ Flaux gave the only judgment and referenced several recent key decisions when reaching their decision.
The European decision in Vnuk v Zaraovalnica was the first of a number of cases which held that the elements of the current regime of UK insurance law are incompatible with the Directives. As such the UK Government has not complied with its obligations under the Directives to ensure compulsory insurance, including cover for use of vehicles on private land.
MIB accepted that they were an “emanation of the state” for the purposes of Article 10 of the Directive, relating to a compulsory body being in place to compensate victims of uninsured or unidentified vehicles.
However, MIB did not accept that they were an “emanation of the state” for the purposes of Article of the Directive, which relates to member states ensuring that civil liability in respect of vehicles based in its territory are covered by compulsory insurance.
Therefore, the Court of Appeal had to decide whether the UK Government had, as a result of the decision in Vnuk, delegated the entirety of their obligations under the relevant articles of the Directives to the MIB, in which case MIB would be liable as the Directives have direct effect, or whether the UK Government had only delegated their obligations to the extent of the requirements of the Road Traffic Act 1988 (i.e. use of a vehicle on a public road) in which case MIB would not be liable.
The recent European decision of Farrell v Whitty (No. 2) played a significant role in LJ Flaux’s judgment. The decision in Farrell held that the Motor Insurers’ Bureau of Ireland (‘MIBI’), which operates in much the same way as the MIB in the UK, was an “emanation of the state” for similar purposes and therefore the Court of Appeal (somewhat inevitably) reached the same conclusion in Lewis.
The Court of Appeal found that the UK Government could not retain a discretion to delegate their obligations to indemnify victims of uninsured vehicles on private land to some other body than the MIB. Given that Articles 3 and 10 were “clear and precise” the Court of Appeal found that they were capable of having direct effect between the claimant and the MIB having determined that the MIB was an "emanation of the state” for these purposes.
As mentioned above this decision now creates a previously unfunded pool of cases which, as a result of the MIB’s direct liability, insurers will have to meet indirectly via the MIB levy. This has a knock on effect to the motoring public who ultimately shoulder the cost.
It is important to note that LJ Flaux commented that MIB may have rights of contribution against the Government, and indeed noted that a Contribution Notice had been issued against the Department for Transport. In light of the same it would seem likely that the MIB may seek an indemnity from the UK Government on the rare cases where Lewis applies given their status as an “emanation of the state”. A re-negotiation of the MIB’s Articles of Association and agreements with the UK Government can also not be ruled out.
The MIB have confirmed that they will seek permission to appeal to the UK Supreme Court and it seems inevitable that there will be proposed amendments to the Road Traffic Act as a result of this judgment, and other recent cases on these issues.
Finally, the overarching issue of the compatibility of UK law with the EU directives will come into sharper focus shortly given the UK’s impending departure from the European Union and, therefore, whilst this decision makes ground breaking extensions to the liabilities of the MIB there may be more twists and turns on this issue in the not too distant future.
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