Farah v Abdullahi & Ors [2018] EWHC 738 (QB)

The ruling will come as a disappointment to insurers as it extends the known application of Cameron, at a time when that case is subject to an ongoing appeal to the Supreme Court.

Cameron v Hussain

In a surprising decision last year, the Court of Appeal extended Insurers' liability to injured claimants under Section 151 of the Road Traffic Act to cases where the identity of the driver is unknown, irrespective of whether the policy (in respect of an identified vehicle) covered the driver. In order to avoid this liability, the insurer had to demonstrate that it was off-cover, or should never have been on-cover by seeking a declaration under section 152(2) of the Road Traffic Act avoiding the policy.

The decision in Cameron permitted a claimant to amend their claim form to substitute as Defendant an unnamed driver, identified only by reference to a specific vehicle driven at a specific time and place.

The Supreme Court has granted permission to appeal the decision in Cameron and a date for the hearing is now awaited.

Farah v Abdullahi & Others

Mr Farah had suffered catastrophic injuries as a result of being hit by two identified vehicles, a Ford Focus and a Mercedes A-Class. The driver of the Mercedes could not be identified, but the vehicle was insured by EUI Limited ("EUI") at the time of the incident.

Claims were issued against the driver (Mr Abdullahi) and insurer (Probus Insurance) of the Ford Focus as First and Second Defendant.

The Third Defendant was not named, but was identified as the person who had collided with the Claimant on 6 September 2014.

Service on the Third (unnamed) Defendant was effected by serving the sealed copy of the Claim Form on the Fourth Defendant – the insurer of the car he was driving, EUI. Master Eastman allowed service of the unnamed Third Defendant's claim form on the solicitors of EUI. The MIB was named as Fifth Defendant.

In response, EUI issued an application seeking to set aside Master Eastman's order on the following basis:

  1. EUI had avoided the policy of insurance covering the Mercedes by way of a declaration pursuant to s152(2), and was therefore off-cover. EUI argued that this meant they had no liability under s151 to satisfy any judgment which may be made against the unknown Third Defendant;
  2. In addition, the Claimant had not followed the procedural rules regarding service without notice by serving the unnamed driver's Claim Form of EUI's solicitors;

Outcome

The Insurer's application was dismissed.

Master Davidson found as follows:

  1. The rule in Cameron does "not rest on the existence of a section 151 liability". The question to be addressed is whether a claim against an unnamed party was capable of conferring a real benefit on a claimant;
    • In this instance, the answer was yes. Master Davidson found two reasons for this:
      • The avoidance of the Mercedes policy by EUI could be challenged by the Claimant, on the basis that the mechanism for avoidance under s152(2) was incompatible with EU Law, specifically referring to the decision in Fidelidade. The Government has already conceded in the matter of Roadpeace v Secretary of State for Transport that s152(2) is incompatible;
      • If the avoidance was valid, then the MIB would be liable to satisfy the claim pursuant to the Uninsured Drivers Agreement. EUI would then cover any outlay by the MIB.
  2. Regarding service of the claim form, the Master noted that the judgment in Cameron had not addressed this issue as the insurers in that case conceded that an order for alternative service (such as that made by Master Eastman) was entirely proper. When faced with the choice of dispensing with service upon an unnamed defendant or serving upon the insurer as "the party who actually stood to foot the bill", then "justice in this situation is better served by service on the insurer."

What can we learn?

  • From an insurer perspective, the decision of Master Davidson will broaden the scope and effect of Cameron. The decision makes clear that even where an insurer intends to avoid or indeed already has avoided the policy under s152(2), this does not preclude a claim against that insurer being successful;
  • It was previously arguable that any insurer faced with a claimant seeking to apply Cameron could, if open to them, pursue a declaration pursuant to section 152(2). This would avoid any s151 liability for a successful claim against an unnamed driver. This was the argument advanced by EUI. Master Davidson rejected this, stating that "the right to proceed against an unnamed defendant should not be confined" in this way;
  • The decision emphasises the incompatibility of s152(2) with EU law, referring to the admission of the Government in Roadpeace, and highlights the continuing issues with incompatibility of national legislation and the Motor Insurance Directive;
  • Master Davidson also found that a claimant looking to issue against an unnamed party in the manner established by Cameron does not require the permission of the Court as "it is a fact that no rule imposes [this] requirement";
  • The timing of this decision is unhelpful for those insurers who have been awaiting the outcome of the Supreme Court appeal in Cameron;
  • Those claimants who have potentially been awaiting the outcome of the Cameron appeal to the Supreme Court may now be encouraged to pursue their claims on the back of this recent decision. Any insurer faced with a claim involving a party identified as an 'unknown person' may wish to consider applying for a stay pending the outcome of the appeal to the Supreme Court in Cameron.