Evans v Motor Insurers Bureau; Mighell v Reading; White v White [1999]

Reported: [1999] 1 LLR 30
Year: 1999

FACTS:-

The Claimant (a man of 67 at the time of the accident) suffered injuries in a road traffic accident on the 25th December 1991 caused by an untraced driver. He was outside his sister’s house in Upper Norwood, bending down on the road side into his parked car in order to locate and remove a parcel, when he was struck by untraced vehicle. His injuries included a serious fracture to his left leg.

He made a claim for compensation on the 17th May 1992 to the Motor Insurers Bureau. The MIB requested a copy of the police report and sent instructions to one of their members, NIG to investigation.

NIG investigated the matter and interviewed the Claimant. His’ solicitors then prepared a financial claim including loss of earnings. (The Court of Appeal in Evans v SSETR and the MIB [2001] EWCA Civ 32 described his business as “precarious”) Both parties obtained medical reports and on the 4th August 1994, NIG offered to pay £40,000 in addition to an interim payment of £10,000 which had already been made. The offer was rejected and the Claimant’s solicitors requested that the matter be referred to the MIB for a formal award.

On the 5th December 1994 NIG confirmed that they had sent a formal report to the Adjudication Panel. The MIB then considered that they had insufficient evidence and they instructed a chartered accountant to consider the loss of earnings claim. The Claimant’s solicitors obtained their own accountant’s report which they submitted to the MIB together with a medical report.

In August 1995 the Claimant’s solicitors sent a revised schedule to the MIB for £183,678.50 plus interest. That did not include damages for the Claimant’s personal injuries.

The MIB declined to disclose their accountant’s report until the matter had been before the Adjudication Panel. On the 11th January 1996 the MIB wrote to the Claimant’s solicitors indicating that he was to a substantial extent responsible for the accident and making an award of £50,000 less interim payments.

On the 14th February 1996, the Claimant’s solicitors duly served a notice of appeal, enclosing further evidence.

NIG were constructed by the Adjudication Panel to give the matter further consideration before an appeal. They instructed enquiry agents to observe the Claimant. In March 1996 a video was obtained together with an up to date medical report. The video purported to show that the Claimant’s impediment in walking was not so significant.

In June 1996 Miss Cotton QC was appointed arbitrator and the MIB wrote to the Claimant’s solicitors Aaron indicating that they were preparing the papers for the arbitrator. On the 12th July 1996 they sent the Claimant’s solicitors a bundle of the papers that they proposed to submit to the MIB together with the video. On the 22nd July 1996 the Claimant’s solicitors indicated that there was no further evidence. On the 27th August 1996 Miss Cotton QC submitted her reasoned award to the MIB and the result was communicated to the Claimant’s solicitors on the 2nd September 1996.

The award was £46,629 which had been calculated on the basis of 20 per cent contributory negligence. The contributory negligence was found on the basis that the Claimant was partly to blame because it was dark and he was standing in the road. In addition it was ordered that the arbitrator’s fee should be paid on the grounds that the Claimant had been dishonest in the account he gave to the doctors and there was no reasonable grounds for the appeal. She found that his account of his continuing disability was “wholly exaggerated.” The Claimant’s solicitors’ disbursements of £770 were paid together with the ex gratia costs of £150 plus VAT.

On the 16th September 1996 Mr Evans applied under section 1(2) of the Arbitration Act 1979 to the Commercial Court for leave to appeal against the arbitrator’s award. On the 16th December 1996, leave to appeal was granted on the issue of whether the arbitrator had jurisdiction to award interest but it was refused on the issue of contributory negligence.

On the 27th July 1997 Thomas J dismissed the Claimant’s appeal. He held that the MIB Untraced Drivers’ Agreement did not confer a right to interest, and also that Directive 84/5/EEC (“the Second Directive”) did not contemplate an award of interest. Mr Evans was ordered to pay £22,000 of the costs of the MIB.

On the 30th September 1998, the Claimant appealed to the Court of Appeal.

His case was heard with two other appeals, Mighell versus Reading and White versus White. In all the cases the injured party sought to rely on rights allegedly given to him as a result of European Community legislation.

White versus White went on to appeal before the House of Lords. Mighell versus Reading concluded in the Court of Appeal.

HELD:-

The Directive

Schiemann LJ reiterated the parts of the Second Directive upon which each of the injured persons relied. The preamble stated:-

“Whereas it is necessary to make provision for a body to guarantee that the injured person will not remain without compensation where the vehicle which caused the accident is uninsured or unidentified;

…..; whereas, however, Member States should be given the possibility of applying certain limited exclusions as regards the payment of compensation by that body and of providing that compensation for damage to property caused by an unidentified vehicle may be limited or excluded in view of the danger of fraud;”

Article 1(4) stated:-

“Each Member State shall set up or authorise a body with the task of providing compensation…..for……personal injuries caused by an unidentified vehicle or a vehicle for which the insurance obligation provided for in paragraph 1 has not been satisfied….

However, Member States may exclude the payment of compensation by that body in respect of persons who voluntarily entered the vehicle which caused the damage or injury when the body can prove that they knew it was uninsured.”

The relevant agreement in Mr Evans’ case was the Untraced Drivers Agreement 1972 – Clause 3, which set down the way in which the MIB would award compensation. Essentially compensation would be awarded using the same methods as a civil court but there was no express right to interest.

Schiemann LJ said that if it were necessary to resolve the issue of whether the concept of compensation included interest, then a reference to the European Court of Justice would be necessary. However for present purposes, he was prepared to proceed on the basis that the United Kingdom was also in breach of its obligations under the Directive.

The Doctrine of Direct Effect

Schiemann LJ said that it was well established that in circumstances where a Member State has failed to implement or has improperly implemented a Directive, then that State might find itself liable to pay compensation to a person who has been given rights under the Directive. The route to making a State liable was to give direct effect to the Directive. That route was available against the State and bodies sufficiently closely identified with the State – “emanations” of the state. The doctrine of direct effect was not however available against “outsiders”

Another route to securing State liability fell under Francovich versus Italian Republic Cases C-6 and 9/90 [1991] ECR 1-5337. State liability was achieved by giving a right to damages against the State for failure to implement the Directive. Mr Evans was not (in this court) bringing that type of claim – he was trying to argue that the Directive (84/5/EEC) had direct effect. Therefore Schiemann LJ considered whether the doctrine of effect applied in this case.

A Member State which had not adopted implementing measures required by a Directive within the prescribed period, could not, as against individuals, plead its own failure to perform those obligations. Where the provisions of a Directive appeared to be unconditional and sufficiently precise, those provisions might be relied upon against any national provisions which were incompatible with the Directive, or insofar as the Directive defined rights which individuals were able to assert against the State.

The case of Frankovich concerned the failure of the Italian government to implement a Directive, requiring Member States to establish a system under which employees would be protected in the event of insolvency of their employer. The European Court of Justice had said that if the provisions did not identify the person or institutions liable to provide guarantees of compensation, the State could not be considered liable on the sole ground that it had failed to implement the Directive. Therefore if the State was left to identify the guarantee institutions, the direct effect route for securing compensation was not available.

The judge in the court below had taken the view that since the MIB had been nominated as the guarantee institution by the United Kingdom, therefore the Directive could be regarded as having direct effect. Schiemann LJ said that this was wrong. In another case Wagner Miret, Case C-334/92 [1993] ECR 1 – 6911 the European Court of Justice had said that the direct effect of a Directive had to appear from the provision itself and from its context, and not from the law of a member state.

Schiemann LJ said that the direct effect of a Directive could not depend on what had or had not been done in a particular Member State. When the Directive came into force, it was open to the Government to fulfil its obligations in any way that it pleased by using the MIB or some other organisation. Consequently the doctrine of direct effect could not apply.

Emanation of the State

The MIB argued that it was not an “emanation of the State” and therefore the doctrine of direct effect could not apply. Schiemann LJ said that there was substantial uncertainty on this point. He would not regard it as acte clair (i.e clear law) that the MIB was not an emanation of the State. However he did not regard it as necessary to express a fixed view on the issue. (Hobhouse LJ did express the view that the MIB was not an emanation of the State – see below).

Conclusion

Mr Evans’ counsel submitted that the concept of compensation under the Directive was wide enough to include the award of interest. Schiemann LJ was prepared to proceed on the assumption that this was correct. Mr Evans’ counsel then submitted that the right given by the Directive was enforceable against the MIB by virtue of the doctrine of direct vertical effect. This was rejected by Schiemann LJ.

Mr Evans’ counsel’s next submission was that the Untraced Drivers Agreement, properly construed provided for the payment of interest. He referred to the case of Marleasing SA v La Commercial Internacional de Alimentacion SA [1990] ECR 1-4135. The UK courts were under a duty to interpret national law in conformity with community law.

Mr Evans’ accident was before the 1996 Untraced Drivers Agreement came into force and was covered by the 1972 Untraced Drivers Agreement. In 1972 the Directive had not been promulgated. The Marleasing principle applied to the principle of national law and put an obligation on the court to interpret national law in the light of community law. It 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 agreement could not be properly categorised as part of national law. The state had been at liberty to fulfil its community obligations in any way it liked.

It seemed to be common ground that the parties to the Agreement (the government and the MIB) in 1972 were under the impression that the Agreement did not require provision to be made for interest and contracted on that basis. In 1986 a question had been put to the then Secretary of State for Transport in Parliament as to whether he would ensure that interest would be paid on compensation to Claimants under the Untraced Drivers Agreement. That question was answered in the negative. In Schiemann LJ’s view this remained the position when the new Untraced Drivers Agreement was introduced in 1996. No interest was payable under this Agreement.

Swinton Thomas LJ agreed with Schiemann LJ.

Hobhouse LJ (agreeing with Schiemann LJ) said that the relevant Untraced Drivers Agreement in 1972 predated the Directive (84/5/EEC). The fact that there was a subsequent Directive with which the State was obliged to comply could not as a matter of private law alter the construction of that contract or the legal obligations of the Bureau under it. The parties to the Agreement (the State and the MIB) agreed that there was no obligation to pay interest under the 1972 Agreement.

Mr Evans might succeed in his claim if he could show that the Directive (84/5/EEC) conferred actionable rights upon him against the MIB. This was a public law claim which could not succeed although Hobhouse LJ’s reasoning was different.

To give rise to individual rights, a directive must satisfy certain criteria.

Does the Directive have direct effect?
Is the entity which it is sought to make liable for the non – implementation of the directive and emanation of the State?

In relation to direct effect, the Second Directive was sufficiently precise to enable the person intended to benefit to be identified. Secondly it also sufficiently defined the scope of the rights which persons were to have. However the third criterion was not satisfied. The Second Directive left it to Member States to decide how to implement the Directive. Therefore the identity of the persons to be made liable was left open and consequently the Directive failed to satisfy the third criterion of direct effect.

Hobhouse LJ took the view that the MIB was not an emanation of the State, but a private law company. It acted on its own behalf in the commercial interest of its members not on behalf of the state or as a delegate of the State. Therefore the MIB had a private law status and it had a private law relationship with the Secretary of State.

Note:-

Mr Evans was ordered to pay the MIB’s costs of the hearing, which were agreed at £24,000. At this stage he was not publicly funded.

Mr Evans obtained public funding in 1999 and he then went on to sue the Secretary of State for the Environment, Transport and the Regions and the MIB in Evans v The Secretary Of State for The Environment, Transport and The Regions And The Motor Insurers Bureau [2001] PIQR P3