Byrne (A Minor) v The Motor Insurers Bureau And The Secretary Of State For Transport [2007]

Reported: [2007] EWHC 1268 (QB)
Year: 2007
Court: Queen's Bench
Full text available: Here

FACTS:-

The Claimant was born in 1989. In about June 1993 (there some doubt about the exact date) when aged 3, he was crossing the road with his father (and possibly also his mother) when a car pulled out of a side road too fast and ran into the Claimant, injuring him. The car was untraced. The Claimant’s parents did not obtain legal advice and were unaware of the existence of the MIB; however they first became aware of the possibility of making a claim in October 2001. Their application was rejected relying on Clause 1(1)(f) of the 1972 Untraced Drivers Agreement, which stated that applications must be brought within 3 years of the accident. The Claimant (through his litigation friend) did not seek to appeal that decision to an arbitrator appointed under the Agreement, but instead commenced the present proceedings In March 2006. He claimed damages as follows:-

A breach by the MIB of the Untraced Drivers Agreement as it should be properly interpreted in accordance with Community law
Alternatively against the MIB for breach of statutory duty arising out of community law directly applicable to the MIB.
Alternatively against the Secretary of State for damages for breach of statutory duty in failing properly to implement Article 1(4) of the Second Directive.

The matter came before Master Yoxall at a case management conference on the 13th October 2006. It was agreed that there should be a trial of the preliminary issues as follows:-

Whether on the true construction of Directive 84/5/EEC and/or by reason of the European Community principle of equivalence, the limitation period in respect of claims brought by minors for personal injury in tort against an untraced driver should be no less favourable than those that applied to a claim against a traced driver.
If the answer to Question 1 was yes, did the 1972 Agreement have to be construed so as to give effect to Article 1(4) of Directive 84/5/EEC and/or by reason of the European Community principle of equivalence?
If the answer to Question 1 was yes and the answer to Question 2 was no, did European Community law impose a directly effective obligation on the First Defendant (the MIB) to provide compensation to a minor who had claimed within three years of reaching his majority?
If the answer to Question 3 was no, was the United Kingdom in sufficiently serious breach of its Community law obligations, and did that breach cause loss to the Claimant such as to entitle him to damages?

HELD:-

Mr Justice Flaux considered the history of the MIB. The applicable Agreement in this case was the Untraced Drivers Agreement made between the MIB and the Secretary of State on the 22nd November 1972. Mr Justice Flaux considered briefly the terms of that Agreement and the criteria in Clause 1(1) for making a claim.

He then considered the First Motor Insurance Directive (72/166/EEC) and the more detailed provisions of the Second Motor Insurance Directive (84/5/EEC) and in particular Article 1(4) of that Directive.

Justice Flaux referred to the effect of the decision of the European Court of Justice in Evans v Secretary of State for the Environment and Motor Insurers Bureau [2003] Case C-63/01.

The Court of Appeal in the case of Mighell v Reading [1999] 1 Lloyds Rep IR 30 (which also involved the Evans case) had taken the view that the Second Motor Insurance Directive did not have direct effect and thereby confer legal rights on the Claimant against the MIB. The Court of Appeal also decided that the principle whereby domestic legislation had to be interpreted in conformity with community law, did not extend to a private law agreement such as the Untraced Drivers Agreement.

Following the Court of Appeal decision in Mighell, Mr Evans brought an action against the United Kingdom, which the MIB applied to join as a party. The matter was referred by Mr Justice Buckley in the High Court to the European Court of Justice, who gave their decision in Evans v Secretary of State for the Environment and Motor Insurers Bureau [2003] Case C-63/01.

The first issue

Mr Justice Flaux considered the arguments put forward by the Claimant’s and Defendants’ counsel. He made two points:-

The aim of the Motor Insurance Directives was to ensure free movement of vehicles based in Community territory. This meant harmonising the national rules on compulsory motor insurance across the Community and obliging Member States to set up a body, which would provide compensation to victims of uninsured and untraced drivers. That purpose would not be achieved unless the victim of an uninsured driver could obtain from the national body set up under Article 1(4) of the Second Motor Insurance Directive, protection equivalent to the protection he would obtain in a national court if he brought a claim against an insured driver. The Untraced Drivers Agreement simply did not provide that kind of protection to someone in the Claimant’s position. His claim was disallowed in about June 1996, whereas a claim in tort in the national courts could be commenced at any time before June 2010.
The European Court of Justice in Evans had ruled that the protection provided by the national scheme to victims of uninsured and untraced drivers must be equivalent to and as effective as the protection available under the national legal system to victims of uninsured drivers.

Therefore the answer to the first question would be in the affirmative.

The second issue

Justice Flaux said that it was a well established principle of Community law that the national courts of a Member State are obliged to interpret domestic legislation, so far as possible, in the light of wording and purpose of a Community Directive in order to achieve the result intended by the Directive and thereby comply with Community obligations. (Marleasing SA v La Commercial Internacional de Alimentacion SA [1990] ECR 1-4135). However that approach could not be used when it meant conflict with a fundamental feature of the legislation.

The problem in this case was that the Court of Appeal in Mighell v Reading [1999] 1 Lloyds Rep IR 30 had said that the principle in Marleasing was not authority for the proposition that an agreement between a national government and another person must as a matter of Community law be interpreted in such a manner that the State has fulfilled all its obligations under Community law.

The Claimant’s counsel argued that the decision in Mighell had been overridden by the European Court of Justice in Evans. Justice Flaux said that the European Court of Justice had not actually made express mention of the judgment in Mighell and disapproved of it, and furthermore the court had not stipulated that the national courts had to apply the Marleasing principle when interpreting the MIB Agreements.

Justice Flaux indicated that if he was wrong, and the Marleasing principle did apply, then the three year time limit Clause 1(1)(f) of the 1972 Agreement could not be considered to be a fundamental feature of that Agreement. Consequently the Agreement could be re-written to incorporate the additional words which were to be found in the Limitation Act 1980.

The third issue

It was accepted by the Claimant that he would have to satisfy two criteria before any breach of the Directive was directly enforceable against the MIB by the Claimant.

that the Second Directive was capable of having direct effect in that the provision relied upon was unconditional and sufficiently precise, the prescribed period for implementation had passed and the Directive had not been correctly implemented by the Member State.
that even if the Claimant established that the Directive was capable of having direct effect, the MIB was an emanation of the State within the meaning of that concept as a matter of Community law.

Justice Flaux considered the first criterion.

The Court of Appeal in Mighell decided that the Second Motor Insurance Directive did not have direct effect. They had followed two European Court decisions C-6/90 and 9/90 Francovich [1991] ECR I-5337 and C-334/94 Wagner Miret [1993] ECR I-6911. In those cases, the European Court had considered Council Directive 80/987 which obliged Member States to set up a guarantee system for the protection of employees in the event of the insolvency of their employer. The European Court had decided that the provisions of the Directive were not sufficiently precise and unconditional in relation to the identity of the person liable to provide the guarantee, because the Member State was given a complete discretion under the Directive as to the organisation, operation and financing of the guarantee institutions.

However the Claimant’s counsel contended that European case law had moved on since that time. Reliance was placed on the decision of the European Court in C-441/99 Gharehveran [2001] ECR I-7687. This decision considered Council Directive 80/987. The Swedish state had designated itself as liable to fulfil this obligation, but Swedish law excluded a person in the position of the Claimant. Her husband had been the owner of the company that had employed her, and which had become insolvent. The European Court said that the Claimant could enforce the Directive directly against the state in the national courts.

Justice Flaux accepted this submission. In the case of the Second Motor Insurance Directive, the discretion had been fully applied and consequently the Directive was capable in principle of having direct effect on the basis of the reasoning in Gharehveran.

Justice Flaux then considered the second criterion, namely whether the MIB was an emanation of the State within the meaning of that concept as a matter of Community law. According to the case of C-188/89 Foster v British Gas [1990] ECR I-3313, an entity would only normally be regarded as an emanation of the state if it satisfied three criteria:-

it performed a public service
it was under the control of the state
it had for that purpose special powers beyond those which resulted from the normal rules applicable in relations between individuals.

It seemed to Justice Flaux that the MIB did perform a public service. However he did not think that the MIB was under the control of the state and he could not see that the MIB had any special powers.

The Court of Appeal in Mighell also addressed this issue. Hobhouse LJ had found that the MIB was not a private law entity, whilst the other members of the MIB did not find it necessary to decide the point. However Schiemann LJ indicated that in his view the MIB was not an emanation of the State. This was not binding but it was persuasive reasoning.

The fourth issue

This left the question of whether the Claimant had a claim for Francovich (see above) or Factortame (see below) type damages against the Secretary of State where the Claimant could not rely on the doctrine of direct effect. This provided another route to securing State liability, which was achieved by giving a right to damages against the State for failure to implement the Directive.

It was common ground that before the United Kingdom could be exposed to such a claim, the Claimant had to satisfy the court that the United Kingdom had manifestly and gravely disregarded the limits on its discretion. This was the test set out by the European Court in Brasserie du Pecheur [1999] QB 404 and refined in later cases such as R v Secretary of State Ex parte Factortame (No.5) [2000] 1 AC 524.

There had been correspondence between the government and the MIB on the issue of limitation, when the government was first seeking to introduce the Second Motor Insurance Directive. However that correspondence related to claims for property damage under the Uninsured Drivers Agreement 1988. The MIB had wanted a three year time limit, but the government’s view prevailed, and the time limit was brought in line with the Limitation Act 1980 (i.e. six years).

The Claimant’s counsel argued that the government had overlooked the limitation rules in the existing Untraced Drivers Agreement, and that was an inexcusable lack of thoroughness. The Secretary of State’s counsel made a number of points including the fact that three other Member States, France, Greece and Luxembourg had designated a shorter time limit for bringing a claim before their equivalent of the MIB, than was allowed under their general limitation rules.

Justice Flaux said that in his view, the failure to amend Clause 1(1)(f) of the 1972 Untraced Drivers Agreement so as to bring it in line with the Limitation Act 1980 and hence comply with Article 1(4) of the Second Motor Insurance Directive, was not attributable to confusion or misunderstanding but an inexcusable lack of thoroughness. The questions of whether other Member States were in breach of their own obligations, was not relevant to the question of whether the United Kingdom was in breach.

As a consequence the government’s breach of the Second Motor Insurance Directive was sufficiently serious to give rise in principle to an exposure to Francovich/Factortame damages.

Mr Justice Flaux made no comment as to whether the Claimant would in fact be able to recover such damages from the Secretary of State.