Cameron v. (1) Hussain (2) Liverpool Victoria Insurance Co. Ltd

The Court of Appeal’s latest foray into the world of motor insurance disrupts the long-standing statutory and non-statutory routes to compensation, prescribed by (i) the Road Traffic Act 1988 and (ii) the relevant Untraced Drivers’ Agreements, respectively.

In its decision, the Court of Appeal considered whether it was possible for the claimant, Ms. Cameron, to obtain judgment against an unidentified hit-and-run driver who – rather than being identified within proceedings by name – might instead be identified only by a description: ‘the person unknown driving vehicle [registration number X] who collided with vehicle [registration number Y] on [date]’.

Whilst the driver was unidentified, a policy of insurance issued to (what transpired was) a non-existent policyholder had been traced as a result of recording the vehicle’s registration number. If the Claimant was able to obtain a judgment against an unidentified hit-and-run driver by ‘naming’ them in proceedings using a description, then LV= would be liable to satisfy such that judgment by operation of section 151 of the Road Traffic Act 1988 (RTA 1988). If, however, Ms. Cameron was not permitted to do so, she would instead have to redirect her claim to the Motor Insurers’ Bureau (MIB) to be dealt with under the terms of the Untraced Drivers’ Agreement 2003.

The facts of the case

On 26 May 2013, Ms. Cameron was involved in a hit-and-run accident with an unidentified driver who was using an identified vehicle, a Nissan Micra, insured by LV=. As a result of the collision, Ms. Cameron and her passengers sustained modest personal injuries, her vehicle was written off, and she incurred losses representing the cost of hiring a replacement vehicle.

The Nissan was registered to the 1st defendant, Mr. Hussain, who refused to co-operate with police enquiries and was ultimately convicted for failing to disclose information about the driver. Whilst the vehicle was insured by LV=, the policyholder was a Mr. Bahadur, a person believed to be fictitious. Mr Hussain, despite being the Nissan’s registered keeper, was not actually insured to drive, and the policy issued by LV=, and providing cover for Mr. Bahadur, had been fraudulently obtained. LV= had, quite understandably, not sought a declaration under section 152(2) RTA 1988, on the basis that the driver had not been identified.

In January 2014, Ms. Cameron issued proceedings against Mr. Hussain, having believed him to be the driver of the vehicle at the time of the accident (it was subsequently accepted that he was not). LV= denied liability on the grounds that (i) Mr. Hussain was not covered by the terms of their policy, and (ii) Ms. Cameron was unable to prove the identity of the driver at the time of the accident, such that it would not be possible to obtain a judgment against the driver and to obtain the benefit conferred by section 151 of the RTA 1988, given that section 151(2)(b) required that “it is a liability… which would be so covered if the policy insured all persons… and the judgment is obtained against any person other than one who is insured by the policy”.

In June 2014, LV= issued an application for summary judgment on the grounds of denial cited above and, soon after, Ms. Cameron made a cross-application for permission to substitute, in place of Mr. Hussain, ‘the person unknown driving vehicle [registration number X] who collided with vehicle [registration number Y] on [date]’.

The decisions of the courts below

On two separate occasions, before a District Judge and a High Court Judge, LV=’s application for judgment succeeded, and Ms. Cameron’s application for substitution of an unknown person in place of the registered keeper was dismissed.

The High Court found “it was neither necessary, nor consistent with the overriding objective of enabling the court to deal with cases justly and at proportionate cost, for the court to permit claims against defendants identified by description rather than name, simply to enable claimants to obtain a judgment which an insurer is then required to satisfy under the Road Traffic Act 1988”.

It also recognised that Ms. Cameron had a perfectly good remedy under the Untraced Drivers’ Agreement 2003, and any legal representative instructed by her was able to recover the costs prescribed by the scheme. It concluded by finding that “To allow the appeal would work considerable potential injustice for the [insurer] who will be left with all the burden of section 151 of the Road Traffic Act 1988, and a prospect of [recovery] from the [unnamed] tortfeasor that is no more than fanciful.”

Permission to appeal to the Court of Appeal was granted on 22 October 2015.

The Court of Appeal decision

Whilst understandable, but nonetheless curious, the Court of Appeal formed the view that it was not relevant for the purpose of the appeal before it to consider the sixth directive (2009/103/EC) of the European Parliament and the Council relating to insurance for the use of motor vehicles (a.k.a. the Motor Insurance Directive (MID)), or the impact which it may have had on the construction of the RTA 1988.

The leading judgment, given by LJ Gloster, states at [41] “the regime imposed by Part VI of the 1988 Act makes clear that, where a policy of insurance is in place in respect of a vehicle, the insurer must… generally meet liabilities to a third party victim irrespective of whether the policy covers the driver/tortfeasor…”

What, in fact, appears to be reasonably clear is that Part VI of the RTA 1988* requires a policy of insurance to be in force in respect of a person’s use of a vehicle, rather than in respect of a vehicle itself (which indicates that the identity of the user is of paramount importance within the legislative framework).

Equally, the scope of the MIB’s Untraced Drivers’ Agreement 2003 explicitly states it shall apply where "it is not possible to identify the person [not the vehicle] who is, or appears to be, liable in respect of the death, injury or damage…" with the 2017 Agreement also requiring that "the person… alleged to be liable in respect of the death… bodily injury… or damage to property is an unidentified person”.

Nonetheless, in following the decision in Bloomsbury Publishing Group v News Group Newspapers [2003] 1 WLR 1633 – and distinguishing Clarke v Vedel [1979] RTR 26 on the grounds it pre-dated the Civil Procedure Rules (CPR) and the RTA 1988 – the majority view was that there was no reason why it should not be permissible under CPR for a claimant to bring proceedings against an unnamed defendant where that course of action was both necessary and efficacious to do justice (subject to the defendant being identified by an appropriate description, and an order for alternative service of the claim form being made).

The court was persuaded that where a claimant has a right conferred by statute to payment by an insurer in the event that s/he obtains a judgment against a negligent driver, it would not be just to deprive them of that remedy. The court was also persuaded by the fact that, in the case of a hit-and-run driver, the unnamed driver had unlawfully sought to place themselves beyond the reach of legal proceedings by failing to stop following the collision.

Ultimately, the Court of Appeal’s split decision was that an identified insurer’s liability under section 151 should not depend on whether, as at the date of issue of the proceedings, a claimant could identify the driver by name, notwithstanding that a judgment would need to be obtained against such an unnamed person.

What this means for you: impact and practical consequences

Whilst this decision is unlikely to trouble the majority of litigants, it is likely to cause significant concern amongst motor insurers. Whereas it would ordinarily be futile to bring proceedings against a defendant who could not be named (because any judgment would not be capable of being effectively enforced), and it would be inconsistent with the overriding objective of the Civil Procedure Rules (‘CPR’) to waste a court’s resources on such fruitless litigation, it is clear that quite different considerations apply to claims involving road traffic accidents. That arises because a very real benefit is conferred upon claimants by section 151 of the RTA 1988 (the duty of insurers to satisfy judgments against third-party risks), which the court was not prepared to deprive Ms. Cameron of, because the negligent driver had deliberately avoided identification.

The courts will now likely consider it efficacious to allow road traffic accident claims to proceed against unnamed defendants where, despite the driver being unidentified, a vehicle and motor policy are nonetheless identifiable and the claimant’s claim relates to a relevant liability within the meaning of the RTA 1988 – undoubtedly another unhelpful decision for insurers (following R&S Pilling (T/A Phoenix Engineering) v UK Insurance Ltd. [2017] EWCA Civ 259) albeit one that is likely to be the subject of permission to appeal, not least because of the dissenting judgment of Sir Ross Cranston.

If this decision stands, it appears inevitable that a greater number of claims involving unidentified drivers, but identified vehicles and policies, would likely be made against, and met by, motor insurers rather than the MIB with such claims naturally costing insurers more than if they have been met by the MIB, because of the more restrictive terms of the Untraced Drivers’ Agreements.

With this in mind, insurers may wish to revisit the merits of obtaining declarations under section 152(2) RTA 1988 on the grounds of non-disclosure and/or false representation to avoid the liability that would now appear to attach under section 151 RTA 1988. In reaching its decision, the leading view expressed by LJ Gloster, at [58], was that insurers must bear the responsibility of not having carried out appropriate checks as to the identity, or existence, of the insured prior to inception of the policy. Equally, it was articulated at [46] that if insurers did not, as a matter of practice, seek declarations that they are entitled to avoid policies in the event of fraudulent non-disclosure or misrepresentation, then that was a matter of their own commercial choosing.

Irrespective of this decision, however, claims involving both an untraced vehicle and an untraced driver should continue to be redirected to the MIB to be dealt with under the terms of the relevant Untraced Drivers’ Agreement.

READ MORE: Part VI of the RTA 1988:

section 143(1)(a) of the RTA 1988 states:a person must not use a motor vehicle… unless there is in force in relation to the use of the vehicle by that person such a policy of insurance… in respect of third party risks as complies with the requirements of Part [VI] of this Act”

section 145(3)(a) of the RTA 1988 states: “the policy must insure such person, persons or classes of persons as may be specified in the policy in respect of any liability which may be incurred by… [the person(s)] in respect of… death… bodily injury… or damage to property caused by, or arising out of, the use of the vehicle on a road or other public place …”

section 151(2)(b) of the RTA 1988 states: “[section 151] applies to judgments relating to a liability... required to be covered by a policy of insurance under section 145 of this Act and... which would be so covered if the policy insured all persons... and the judgment is obtained against any person other than one who is insured by the policy”.