Evans v The Secretary Of State For The Environment, Transport And The Regions And The Motor Insurers Bureau – Case c-63/01 [2003]

Reported: CASE C-63/01 [2003] (Judgment of European Court of Justice)
Year: 2003
Full text available: Here

FACTS:-

The facts of this case are set out in Evans v The Secretary of State for the Environment, Transport and the Regions and The Motor Insurers Bureau [2001] PIQR P3 which was decided by Mr Justice Buckley in the Queen’s Bench Division of the High Court. Mr Justice Buckley decided to refer a series of questions to the European Court of Justice. That decision was appealed to the Court of Appeal, but the appeal was dismissed. (See Evans v The Secretary of State for the Environment Transport and the Regions and the MIB [2001] EWCA Civ 32.)

Advocate General Alber had already prepared an opinion for the ECJ, which answered the questions put by the High Court. These can be seen at Evans v The Secretary of State for the Environment, Transport and the Regions and the Motor Insurers Bureau – Opinion of Advocate General Albert Case No. C-63/01 (Delivered On 24th October 2002).

HELD:-

The Court considered the provisions of Council Directive 72/166/EEC (“The First Directive”) and Council Directive 84/5/EEC (“The Second Directive”). They then went on to consider the way in which the UK government had implemented the Second Directive, by way of agreements with the MIB and in particular the 1972 Untraced Drivers Agreement.

The following questions had been referred to the ECJ;-

“1. On the proper interpretation of Council Directive 84/5/EEC of 30 December 1983 on the approximation of the laws of the Member States relating to insurance against civil liability in respect of the use of motor vehicles (the Second Motor Insurance Directive):-

(a)    must the arrangement concerning the provision of compensation by the body established or authorised pursuant to Article 1(4) include provision for the payment of interest on the sums found to be payable for the damage to property or personal injuries?”
(b)    if the answer to question (a) is yes, from what date and on what basis should such interest be calculated?

2. On the proper interpretation of Article 1(4) of the Second Motor Insurance Directive, in circumstances where the compensating body itself has an obligation to investigate the victim’s injury and loss (and to incur the costs thereof, including the cost of medical and other reports):

(a)    must the arrangements concerning the provision of compensation by the body include provision for the payment of the costs incurred by a victim in preparing and making his application to that body for compensation?
(b)    If the answer to question (a) is yes, on what basis are those costs to be calculated in a case where that body has made an offer to the victim in excess of the amount that he finally recovers, which offer the victim declined to accept?

3. On the proper interpretation of Article 1(4) of the Second Motor Insurance Directive, if the victim’s application for compensation is determined by a body that is not a court, must he have a full right to appeal against that determination to a court, on both the facts and the law, rather than an appeal to an independent arbitrator having the following principal characteristics:

(i)    the victim may appeal to the arbitrator on both the facts and the law;
(ii)    when giving notice of appeal, the victim may make further representations and adduce further evidence to the compensating body upon which the compensating body may alter its award prior to the appeal
(iii)    the victim is provided in advance with a copy of all the material to be provided to the arbitrator and is given the opportunity to add any material that he wishes in response;
(iv)    the arbitrator makes an award, without an oral hearing, in which he or she decides what award the compensating body ought to make and gives reasons for that decision;
(v)    if the victim is dissatisfied, he is entitled to appeal from the arbitrator to the Courts but he may do so only on the grounds of serious irregularity affecting the arbitration or on a question of law (including whether there was any evidence to support any particular conclusion of the arbitrator or whether any particular conclusion was one to which no arbitrator could reasonably come upon the evidence), and in the case of an appeal on a question of law, permission to appeal must be obtained from the Court which will not be given unless the decision of the arbitrator is obviously wrong and it is just and proper in all the circumstances for the Court to determine the question.

4. If the answer to questions 1(a) and/or 2(a) and/or 3 is Yes, has a Member State duly authorised a body under Article 1(4) of the Second Motor Insurance Directive when an existing body has the task of providing compensation to victims pursuant only to an agreement with the relevant authority of the Member State that does not correspond to the Second Motor Insurance Directive in those respects, and

(a)    that agreement creates a legal obligation owed to the relevant authority of the Member State to provide compensation to victims which is directly enforceable by the relevant authority and does not give such victims a directly enforceable legal right to claim against that body, but the victim may apply to the Court for an order that the authority should enforce the agreement if the authority were to fail to do so; and
(b)    that body carries out that obligation by accepting and paying claims from victims in accordance with that agreement; and
(c)    the Member State considered in good faith that the provision of that agreement gave at least as good protection to victims as the requirements of the Second Motor Insurance Directive?

5. If the answer to any of questions 1(a) or 2(a) is Yes, and/or if the answer to question 4 is No, does a failure to comply with the Second Motor Insurance Directive in that respect constitute a sufficiently serious breach by the Member State to give rise to liability for damages as a matter of Community law if it is established that such damage was caused? “

The ECJ said that it was appropriate to consider the nature of the system established by the Second Directive for the benefit of victims of damage or injury caused by unidentified or insufficiently insured vehicles. A victim of an untraced driver was unable to enforce their claim for compensation because of the impossibility of identifying the person against whom proceedings should be brought. In contrast, an uninsured driver was unlikely to be able to satisfy any claim.

The European Community legislature’s intention was to entitle victims of damage or injury caused by unidentified or insufficiently insured vehicles to protection, equivalent to, and as effective as, that available to persons injured by identified and insured vehicles.

However the body responsible for awarding compensation (the MIB) did not have to be placed, as far as civil liability was concerned, on the same footing as a Defendant such as the driver of an identified and sufficiently insured vehicle.

The nature of the body referred to in Article 1(4) of the Second Directive

There was nothing in Article 4(1) of the Second Directive about the legal status of the body to be set up by Member States, to fulfil this task nor any detailed arrangements for its authorisation. It expressly allowed Member States to regard compensation by the body as subsidiary and also made provision for the settlement of claims between the body and those responsible for the accident, as well as other insurers and social security bodies.

However the second sub paragraph of Article 1(4) made it clear that the victim must be able to apply directly to the authorised body responsible for paying compensation.

The fact that the source of the obligation of the body in question lay in an agreement concluded between it and the public authority was immaterial, provided that the agreement is applied so as to oblige the body to provide victims with compensation.

However it was necessary for Member States to guarantee that the national authorities would effectively apply the directive in full, that the legal position under national law should be sufficiently precise and clear and that individuals were made fully aware of their rights and, where appropriate, may rely on them before the national courts. That last condition was of particular importance and the court cited two cases Case C-365/93Commission v Greece [1995] ECR I-499 and Case C-144/99 Commission v Netherlands [2001] ECR I-3541.

Therefore a body in the position of the MIB, bound by an agreement with a public body, would be regarded as duly authorised for the purposes of Article 1(4) provided the agreement was interpreted and applied as obliging the body to provide victims with the compensation guaranteed to them under the Second Directive, and provided that victims could apply directly to that body.

The remedies available to victims

The second sub paragraph of Article 1(4) confines itself to laying down minimum procedural requirements by providing that victims of uninsured and unidentified drivers had to be able to apply directly to the body responsible for providing them with compensation, and that body was required to give them a reasoned reply.

It was settled case law that in the absence of Community rules governing the matter it was for the domestic legal system of each Member State to designate the courts and tribunals having jurisdiction and to lay down the detailed procedural rules governing actions for safeguarding rights which derived from Community law, provided however that such rules were not less favourable that those governing similar domestic actions and do no render virtually impossible or excessively difficult the exercise of rights conferred by Community law. (Case C-120/97 Upjohn [1999] ECR I223)

The procedure established by the MIB under the 1972 Agreement comprised of several phases:-

The MIB was not a court, but nevertheless it was required to determine the amount of compensation in the same way as a court.
The victim was entitled to apply for a re-examination of the decision taken by the MIB, although that application went to the MIB itself.
There was then a right of appeal to the arbitrator, who is appointed under conditions that ensure he is independent. That arbitrator has all the papers put before him and he can call on the MIB to make additional investigations.
In certain cases (serious irregularity or infringement of rule of law) the victim can appeal to the High Court against the arbitrator’s decision. That appeal could then be taken to the Court of Appeal and then to the House of Lords.

The United Kingdom claimed (without being contradicted) that the bulk of the investigation was carried out by the MIB, and so the Agreement gave the victims the advantages of speed and economy of costs.

Therefore the procedural arrangements laid down by national law did not render it practically impossible or excessively difficult to exercise the right to compensation conferred on victims. Therefore the level of protection corresponded to that provided for by that directive.

The ECJ’s only reservation was that it was important to stress that the procedure established had to guarantee both in dealings with the MIB and before the arbitrator, victims were made aware of any matter that might be used against them and have an opportunity to submit their comments thereon.

It was for the national court to determine whether those conditions had been fulfilled in this case.

Payment of interest on sums paid by way of compensation

The Second Directive contained no provision concerning interest on sums awarded by way of compensation for victims for uninsured and untraced drivers.

The ECJ cited the cases of Case C-308/87 Grifoni v EAEC [1994] ECR I-341 and Case C-271/91 Marshall [1993] ECR I-4367.

Compensation for loss could not leave out of account factors, such as the effluxion of time, which might in fact reduce its value. Member States could choose between awarding interest or paying compensation in the form of aggregate sums which took account of the effluxion of time. However it was incumbent on Member States to lay down the rules to be applied for that purpose.

Reimbursement of costs incurred in connection with the application for compensation

The Second Directive contained no provision concerning reimbursement of costs incurred by the victims of damage or injury caused by unidentified or insufficiently insured vehicles. The view of most Member States was that the question of costs was a procedural matter. In the absence of Community rules governing the matter, it was for the domestic legal system of each Member State to lay down the detailed procedural rules governing actions for safeguarding the rights of individuals under Community law.

It was the duty of the national court to verify whether, under the procedural arrangements adopted in the United Kingdom, those principles are complied with. The national court should also consider in view of the less advantageous position that the victims find themselves in and the conditions under which they are able to submit their comments on matters that may be used against them, whether it was reasonable for necessary for them to be given legal assistance.

In the circumstances, Article 1(4) is to be interpreted as meaning that compensation awarded for damage or injury caused by an unidentified or insufficiently insured vehicle, is not required to include reimbursement of the costs incurred by victims in connection with the processing of their application for compensation, except to the extent to which such reimbursement is necessary to safeguard the rights derived by victims from the Second Directive in conformity with the principles of equivalence and effectiveness. This was a matter for the national court to consider.

Possible liability on the part of the Member State concerned

The ECJ had repeatedly held that the principle of liability on the part of a Member State for damage caused to individuals as a result of breaches of Community law is inherent in the system of the Treaty.

As to the conditions to be satisfied for a Member State to be required to make reparation for loss and damage caused to individuals as a result of breaches of Community law, these were threefold:-

The rule of law infringed must be intended to confer rights on individuals
The breach must be sufficiently serious
There must be a direct causal link between the breach of the obligation incumbent on the State and the loss or damage sustained the injured parties.

If in light of the examination taken by the national court, the compensation system set up in the United Kingdom was found to be subject to one or more defects of transposition, and then it will be incumbent on the national court to determine whether or not those defects had affected the Claimant. If they had affected the Claimant, then it would be necessary to determine whether the non-fulfilment of the UK’s obligation to transpose the Second Directive was sufficiently serious.

With regard to that decision, the following factors had to be taken into account:-

The clarity and precision of the rule infringed
Whether the infringement or the damage caused was intentional or voluntary
Whether any error of law was excusable or inexcusable
The fact that the position taken by a Community institution may have contributed towards the adoption or maintenance of national measures or practices contrary to Community law.

The costs of the proceedings before the ECJ would be a matter for the national court.

Therefore the answer to the questions put by the High Court of England and Wales would be:-

“1. Article 1(4) of Second Council Directive 84/5/EEC of 30 December 1983 on the approximation of the laws of the Member States relating to insurance against civil liability in respect of the use of motor vehicles is to be interpreted as meaning that:-

A body may be regarded as authorised by a Member State within the meaning of that provision where its obligation to provide compensation to victims of damage or injury caused by unidentified or insufficiently insured vehicles derives from an agreement concluded between that body and a public authority of the Member State, provided that the agreement is interpreted and applied as obliging the body to provide victims with the compensation guaranteed to them by Directive 84/5 and provided that victims may apply directly to that body.

Procedural arrangements such as those adopted in the United Kingdom are sufficient to provide the protection to which victims of damage or injury caused by unidentified or insufficiently insured vehicles are entitled under Directive 84/5.

The compensation awarded for damage or injuries caused by an unidentified or insufficiently insured vehicle, paid by the body authorised for that purpose, must take account of the effluxion of time until actual payment of the sums awarded in order to guarantee adequate compensation for the victims. It is incumbent on the Member States to lay down the rules to be applied for that purpose.

The compensation awarded for damage or injury caused by an unidentified or insufficiently insured vehicle, paid by the body authorised for that purpose, is not required to include reimbursement of the costs incurred by victims in connection with the processing of their application for compensation except to the extent to which such reimbursement is necessary to safeguard the rights derived by victims from Directive 84/5 in conformity with the principles of equivalence and effectiveness. It is for the national court to consider whether that is the case under the procedural arrangements adopted in the Member State concerned.

2. It is incumbent on the national court, if examination of the existing compensation system discloses a defect in transposition of Directive 84/5 and if that defect has adversely affected Mr Evans, to determine whether the breach of that obligation of transposition is sufficiently serious. “