The Court of Appeal has extended insurers' liability under Section 151 of the Road Traffic Act to cases where the identity of the driver is unknown. Claimants can now elect to bring a claim against the vehicle's insurers rather than using the MIB Untraced Driver's Agreement. Accordingly insurers will now bear the cost of these claims.
The Claimant was involved in a hit-and-run collision. The driver was not identified, but the Claimant traced the registered keeper of the vehicle and an insurance policy. The Claimant issued proceedings against both the keeper of the vehicle (incorrectly believing him to be the driver) and the vehicle's insurers.
The insurer denied liability on the grounds the policy did not cover the registered keeper and the driver had not been identified. The insured could not be traced; it was believed he was fictitious and the policy was fraudulent. The insurer applied for summary judgment.
The Claimant's applied to substitute the name of the First Defendant to ‘the person unknown driving vehicle registration number Y598 SPS who collided with vehicle …".
District Judge Wright dismissed the application and granted summary judgment for insurers. His Honour Judge Parker upheld the decision on appeal, finding the Claimant could submit a claim under the Motor Insurers' Bureau Untraced Drivers Agreement (UTDA). Permission to appeal to the Court of Appeal was allowed.
The Court of Appeal found:
- An insurer's s.151 liability applied regardless of whether the policy covered the driver and irrespective of the driver's identity, unless the insurer could demonstrate that it was off-cover, or should never have been on-cover.
- In appropriate cases it will be permissible under the Civil Procedure Rules for a claimant to bring proceedings against an unnamed driver for damages. The court should have regard to the overriding objective when deciding if the case is appropriate.
- The availability of a remedy under the UTDA did not preclude the Claimant from pursuing an unnamed defendant.
The Claimant was permitted to amend their claim to substitute an unnamed driver, identified by reference to a specific vehicle driven at a specific time and place.
Although no application has yet been made, insurers may look to request permission to pursue an appeal to the Supreme Court.
What can we learn?
- The decision is bad news for insurers; it will to lead to increase costs exposure as it provides claimants with a route to litigate against insurers directly in these circumstances.
- Although claimants can still elect to bring a claim under UTDA, this is highly unlikely given a cap on recoverable costs is imposed.
- Practically insurers may face several issues in allowing the driver to be sued by description alone. Insurers will have no way of obtaining a driver's version of events, making decisions on whether to defend the case more difficult.
- Insurers' rights of recovery will also be limited by the decision, as the right of recourse is dependent on it being possible to identify the driver. This issue is particularly acute in relatively minor claims where the driver is likely to have the means to reimburse the insurer.
- Although the argument was dismissed by the Court of Appeal, the decision may increase the number of fraudulent cases claiming unidentified drivers. Enhanced due diligence and identification checks when incepting policies would assist insurers in establishing identity and place them in the best position when faced with claims such as these.