This case (Case C-442/10, Churchill Insurance Company Limited v Benjamin and Tracy Evans v Equity Claims Limited) which arose out of two references to the European Court of Justice (ECJ) made in separate cases before the English courts, concerned an issue unique to the system of vehicle insurance in the UK. In the UK, motor insurance policies are personal policies, such that only the person insured, or drivers nominated by the insured, are covered for damage caused while driving the vehicle. Under this system, an anomaly can arise where the person injured as the result of an accident is the insured under the policy, but where the insured has given permission for an unauthorised (and therefore uninsured) person to drive the car in question. Although the insured is the victim of injury, who ought, as a general rule, to be entitled to compensation, under English law (section 151(8) of the Road Traffic Act 1988), the insured (having allowed an unauthorised person to drive the car) may also be bound to reimburse the insurer for the amount paid to the victims. The net effect of this situation is that the insured victim of injury can receive nothing from the insurer.
The English courts referred two cases in which this situation had arisen to the ECJ in order to ascertain whether this situation could be reconciled with EU law, in particular with Article 13(1) of Directive 2009/103/EC relating to insurance against civil liability in respect of the use of motor vehicles (the Directive) which states that "Each member state shall take all appropriate measures to ensure that any statutory provisions or any contractual clause...shall be deemed to be void in respect of claims by third parties who have been victims of an accident where that statutory provision or contractual clause excludes from insurance the use or driving of vehicles by... (a) persons who do not have express or implied authorisation to do so...".
Advocate General Mengozzi (whose opinion is not formally binding on the ECJ, although in practice the ECJ will often follow the decisions of its advocates general) opined that the circumstances of the cases referred clearly fell within the ambit of Article 13(1)(a) of the Directive, such that the statutory provision relied on by the relevant insurers was incompatible with EU law. The advocate general stated that "an owner/insured who was not the driver of the vehicle is indeed to all intents and purposes a 'third party' protected by that provision". The case will now go before the ECJ itself and if it reaches the same decision, the cases will be referred back to the UK courts for further consideration.