The Court of Appeal upholds a judgment against the UK government where the Motor Insurers’ Bureau had refused to pay a claim
The first instance decision in this case was reported in Weekly Update 21/14. The claimant suffered severe personal injuries when the car in which he was a passenger crashed due to the driver’s negligence. The driver’s insurers had avoided his motor insurance policy (on the ground, inter alia, that he had not disclosed, or had misrepresented, that he was a habitual cannabis user) and so he claimed under the Uninsured Drivers’ Agreement 1999 (“the Agreement”). The Court of Appeal held that his claim failed because of clause 6(1)(e) (iii) of the Agreement, which excludes a claim by a claimant who has allowed himself to be carried in a vehicle if he could reasonably be expected to know, or ought to have known that “the vehicle was being used in the course or furtherance of a crime”. Here, the judge had found that the purpose of the car journey had been to collect and transport illegal drugs (cannabis) for subsequent re-sale.
The claimant then brought proceedings against the Secretary of State for Transport, arguing that clause 6(1)(e)(iii) was incompatible with the relevant EU Directives (specifically, Article 1(4) of Directive 84/5 (the Second Directive)), which provides for only certain exclusions, for example, where a person voluntarily entered the vehicle knowing that it was uninsured. He won at first instance and the Secretary of State appealed.
The Court of Appeal has now dismissed that appeal. It held that the only permitted exclusions are those set out expressly in Article 1(4) itself. No further exclusions (such as where a person allows himself to be carried in a vehicle which is being used in furtherance of a crime) are permitted. The Court of Appeal referred to the general principle of EU law that derogations from a general rule are to be strictly construed. Furthermore, the construction of the Article contended for by the Secretary of State ran counter to the aim of protecting victims, which is repeatedly stated in the directives and ECJ caselaw. The Court of Appeal also found that the Secretary of State’s breach was sufficiently serious to give rise to liability to damages.
COMMENT: It may be worth recalling that this decision does not impact on motor insurers, who remain entitled to decline cover where a claimant has allowed himself to be carried in a vehicle being used to further a crime. Instead, it is the insurer of last resort, the Motor Insurers’ Bureau, which will be unable to refuse compensation on that basis.