Byrne (a minor) v The Motor Insurers Bureau and the Secretary of State for Transport 2008

Reported: [2008] EWCA Civ 574
Year: 2008
Court: Court of Appeal
Read full case: 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. Joined Cases C-6/90 and C-9/90 Francovich v Italian Republic [1991] ECR I-5357 (a Francovich claim). The MIB was joined as Second Defendant at its own instance.

He claimed damages as follows:-

1)   A breach by the MIB of the Untraced Drivers Agreement as it should be properly interpreted in accordance with Community law
2)   Alternatively against the MIB for breach of statutory duty arising out of community law directly applicable to the MIB.
3)   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:-

1)   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.
2)   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?
3)   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?
4)   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?

Those questions were then put to Mr Justice Flaux. He found that on the true construction of the Second Directive and/or by virtue of the Community principle of equivalence, the MIB procedure should be subject to a limitation period no less favourable than that which applied under the Limitation Act 1980. Secondly he found that the government’s breach of the Second Motor Insurance Directive was sufficiently serious to give rise in principle to an exposure to Francovich 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. The Defendants appealed.

HELD:-

Lord Justice Carnwath said that the issues before the court were short, whether the limitation provisions of the 1972 Agreement complied with European Union law, and if not, whether the Government was liable in damages under the Francovich principle.

Carnwath LJ went over the history of the MIB and the provisions of the 1972 Agreement. It was common ground that had the negligent driver been traced but uninsured, the Claimant could have brought an action within 3 years of attaining his majority, whereas under the Untraced Drivers Scheme, his claim was barred by 1996.

Carnwath LJ then considered the operation of the First and Second Motor Insurance Directives. He also considered the case of Evans v Secretary of State and Motor Insurers Bureau [2003] Case C63/01. The principal issue in that case was whether the MIB agreement was defective in failing to provide for payment of legal costs and interest on the award. However the European Court of Justice was also faced with more general questions as to the conformity of the MIB procedure with the obligations of the Directive, and as to the consequence of non-compliance. The judgment could be seen therefore as a template for consideration of the closely related issues arising in the present appeal. The ECJ had made some “Preliminary Observations” which Carnwath LJ now set out in full. He referred in particular to one paragraph (paragraph 27) which encapsulated the argument between the parties. Paragraph 27 said that in the view of the ECJ, the intention of the European Community was to entitle victims of damage caused by untraced drivers to protection equivalent to and as effect as that available to person injured by traced drivers.

In the case of Evans, the ECJ had said that the MIB system did not render it practically impossible or excessively difficult to claim compensation caused by untraced drivers. However the ECJ did take issue with the non-payment of interest under the 1972 Untraced Drivers Scheme. There should be some payment made to take account of the effluxion of time. In relation to costs, the ECJ said that it was for the national court to verify whether the absence of a full costs regime failed to safeguard rights that individuals derived from Community law.

Carnwath LJ drew from that judgment of the ECJ the following points:-

•   It was for the national courts to determine whether the MIB principles satisfied the principles of effectiveness and equivalence. In making that assessment the court should look at the cumulative effect of the possibilities of review under that procedure and also the practical advantages associated with that procedure.
•   The appropriate comparison for the purposes of the principle of equivalence was the system of remedies available for insured drivers.
•   The fact that the MIB procedure looked at as a whole met the requirements of effectiveness and equivalence was not a sufficient answer to the specific complaints in respect of interest and costs.
•   In the event of non compliance, the liability of the State was to be judged by the national courts in accordance with the principles established by cases such as 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.

The principle of equivalence

The principle of equivalence was well established in community law. It raised two sub questions, first was there a similar domestic action, and secondly were the rules applicable to the Community right “not less favourable”. Carnwath LJ said that paragraph 27 from the judgment in Evans was clear as to the appropriate comparison to be applied.

Less favourable treatment

Carnwath LJ now turned to Clause 1(1)(f) of the 1972 Agreement, which precluded any application made more than three years after the accident. He was unpersuaded that it made any material difference that there were other procedural advantages (a quick, easy and cheap procedure) to the MIB scheme. The test was equivalence not identicality, not every procedural difference was significant. Such a procedure could hardly be used to justify the much shorter time limit under Clause 1(1)(f). The only arguable point to the contrary was that the burden lay on the MIB to investigate the matter, which burden was aggravated by delay in lodging a claim. However there was no evidence to show that this factor on its own was sufficient to impede the effective operation of the scheme. Therefore Carnwath LJ agreed with the judge below him. The MIB procedure should be subject to a limitation period no less favourable than that which applied under the Limitation Act 1980.

Francovich damages

There were three conditions to be satisfied for a Member State to be liable for damage as a result of breaches of Community law.

a)   The rule of law infringed must have been intended to confer rights on individuals
b)   The breach must have been sufficiently serious
c)   There must have been a direct causal link between the breach of the obligation resting on the State and the loss and damage sustained by the injured parties.
b) was in dispute. The application of the relevant principles varied with the context.

Carwath LJ referred again to the case of Evans and the evidence produced by the Secretary of State and the Claimant in this case. There was in fact very little direct evidence remaining of the implementation of the Second Motor Insurance Directive by the UK government. The “sufficiently serious” criterion laid down by the European Court of Justice was not a hard edged test. It required a value judgment by the national court. There were three important points:-

•   The relative precision of the requirement following the decision in Evans
•   The serious consequences of failure to comply
•   The clear warning given in Evans of the need to make the comparison

Therefore liability was established and the appeal would be dismissed. The declarations made by the judge would be upheld.

Keene LJ and Waller LJ agreed.