White v White And Another [2001]
- Reported: [2001] UKHL 9
- Year: 2001
- Court: House of Lords
- Full text available: Here
FACTS:-
The Claimant, Brian White sustained very serious injuries shortly after midnight on the 5th June 1993. He was in a motor car going to a late night party on the outskirts of Hereford, when the vehicle overturned. At the time, he was under the influence of alcohol and the motor car was driven by his brother, Shane White. It was entirely clear who owned the car, but it was probably owned by Shane White who was in addition uninsured and disqualified from driving. There was no dispute that his negligence had caused the accident. The Claimant brought an action against his brother and the Motor Insurers Bureau. In the past both brothers had been accustomed to drive whilst uninsured. Three years prior to the accident (1990) they had agreed (whilst in prison) that it would be better to put themselves in a position where they could drive cars legally.
The case came before Judge Potter who gave judgement on the facts on the 13th March 1997. He found that the Claimant was conscious of what was going on, even though he had been drinking and therefore he could be described as allowing himself to be carried in the vehicle. He rejected the idea that on the night in question any one of those involved “so much as bothered his head about such a matter as insurance.” He also found that whilst it could not be said that the Claimant knew that his brother was uninsured, he clearly ought to have known. At that stage, the Claimant’s case looked as if it would fail.
However Judge Potter was then referred to European Community Law. The terms of the Council Directive 84/5/EEC (“The Second Directive”) stated that Member States could exclude the payment of compensation to a passenger who “knew” that the car in which they were travelling was uninsured. This was in contrast to the terms of Clause 6(1)(e) of the Motor Insurers’ Bureau Agreement 1988 which excepted the MIB from compensating a passenger who “knew or ought to have known” that the car was uninsured.
The Claimant’s counsel submitted that the terms of Article 1(4) of the Second Directive covered this case. Article 1(4) was capable of direct enforcement by victims of motor vehicle accidents, the MIB was an emanation of the state and the Claimant could enforce Article 1(4) against the MIB.
Judge Potter gave judgment on this issue on the 12th March 1998 and he accepted that argument.
The Court of Appeal allowed the MIB’s appeal in the linked cases of Mighell v Reading [1999], Evans v Motor Insurers Bureau and White v White Lloyds Law Reports 30 Vol. 1. They commented many a judge might have drawn different inferences from the facts, but that it was still legally open to the judge in this case to reach the conclusion that he did. They then held that whilst the terms of the Second Directive were to be taken into account in construing the MIB Agreement, Clause 6(1)(e) of the Agreement effected a wider exclusion than was authorized by Article 1(4) of that Directive. Therefore the government had failed fully to implement the Directive. However the Second Directive did not have direct effect and could not be enforced directly against the MIB. This was because the “body” that was to be given the task of compensating victims of uninsured drivers was not identified in the Directive. The Directive had left those arrangements to Member States.
Therefore it was left to the Claimant to sue the UK government for that failure under the doctrine in Francovich v Italian Republic (Joined Cases C-6/90 and 9/90) [1995] ICR 722.
Consequently the Claimant’s claim fell within the “knew or ought to have known” exception in the 1998 MIB Agreement and he could not recover against the MIB.
There was then an appeal to the House of Lords.
HELD:-
Lord Nicholls of Birkenhead gave the lead judgment. He considered the history of the MIB and the 1988 Uninsured Drivers Agreement. He quoted Clause 6(1) of that Agreement which read:-
“(1) MIB shall not incur any liability under clause 2 of this agreement in a case where….(e) at the time of the use which gave rise to the liability the person suffering death or bodily injury…..was allowing himself to be carried in or upon the vehicle and…..before the commencement of his journey in the vehicle….he – (i) knew or ought to have known that the vehicle had been stolen or unlawfully taken, or (ii) knew or ought to have known that the vehicle was being used without there being in force in relation to its use such a contract of insurance as would comply with Part VI of the Road Traffic Act 1972.”
Lord Nicholls then considered the Second EEC Motor Insurance Directive 84/5/EEC, which related to the approximation of the laws of the member states relating to insurance against civil liability in respect of the use of motor vehicles. The purpose of the MIB 1988 Agreement was to give effect that Directive.
The main purpose of the Directive was to improve guarantees of compensation for victims of motor accident by ensuring a minimum level of protection for them throughout the European Community. Article 1(4) stated:-
“Each member state shall set up or authorise a body with the task of providing compensation, at least up to the limits of the insurance obligation for damage to property or personal injuries caused by an unidentified vehicle or a vehicle for which the insurance obligation provided for in paragraph 1 has not been satisfied.”
There was then an exception:-
“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.”
There was a difference between the definition of knowledge in the MIB Agreement and the Directive. The Directive used the word “knew” without any adornment. The Agreement used the words “knew or ought to have known.”
The European Court of Justice had stressed repeatedly that exceptions are to be construed strictly. The exception permitted a member state, contrary to the general rule to make no provision for a victim of personal injury or damage to property. A narrow approach was further supported by the other prescribed limitation, the person entering the vehicle must do so voluntarily. The Directive emphasised the exceptional nature of the exclusion of compensation by placing the burden of proving knowledge on the party who seeks to invoke the exception, namely, the institution responsible for paying compensation.
If a passenger was told that the car was uninsured, that would be knowledge as would be the case if the passenger knew that the driver had no driving licence. This was actual knowledge.
There was then the situation where the passenger deliberately refrained from asking questions lest his suspicions (that the driver had no insurance) should be confirmed. The law would generally treat such a person as having knowledge.
Lord Nicholls considered that these two situations fell within the scope of the exception, and that was acte clair. However he doubted that carelessness or negligence fell within that scope. That was also acte clair and the Claimant’s case came within that category.
The finding by the trial judge was no more than a finding of carelessness assessed by the standard of the ordinary prudent passenger having the knowledge possessed by this particular passenger.
Lord Nicholls then turned to the interpretation of the MIB Agreement. Had the MIB Agreement been embodied in legislation, whether primary or secondary, the English court would have been under an obligation to interpret its provisions, as far as possible in a way which gave effective to the Directive. (Marleasing SA v La Comercial Internacional de Alimentacion SA (Case C-106/89) [1990] ECR I-4135).
The present case did not involved legislation but a private contract. The Marleasing principle could not be stretched to the length of requiring contracts to be interpreted in a manner that would imposed on one or other parties obligations, which the contract did not impose. That was the case even if one of the parties was an emanation of the State.
However Lord Nicholls said that the conventional principles of interpretation of documents put the Claimant within the terms of the Agreement and outside the exception. He respectfully differed from the approach of the Court of Appeal in of Mighell v Reading [1999], Evans v Motor Insurers Bureau and White v White Lloyds Law Reports 30 Vol. 1
Schiemann LJ in the Court of Appeal had said that he was prepared to assume that the MIB’s exclusion in their Agreement went beyond that permitted by the Directive. He was also prepared to assume that the disparity between the Directive and the MIB Agreement could not be resolved and that the United Kingdom was therefore in breach of its obligations under the Directive to make its national provisions comply with the Directive.
The Claimant’s counsel had submitted to the Court of Appeal that the Agreement should be construed in such a way that, even though the Claimant ought to have known that the driver was uninsured, nevertheless he should be permitted to recover under the Agreement. Schiemann J said that the insuperable difficulty with this submission in the context of the Claimant’s claim, was that nothing that could legitimately be described as a process of construction of the Agreement could result in the construction of the Agreement to mean what the Claimant’s counsel submitted it should mean.
Lord Nicholls said that the purpose for which the MIB Agreement was made furnished a compelling context. Clause 6(1)(e)(iii) of the 1988 Agreement was intended by the parties to carry through the provisions of the Directive. The phrase “knew or ought to have known” in the Agreement was intended to be coextensive with the exception permitted by Article 1 of the Directive and it should be construed accordingly. “Ought to have known” was apt to include knowledge which an honest person who enters the vehicle voluntarily would have, and it included the case of a passenger who deliberately refrains from asking questions. It was not apt to include mere carelessness or negligence. A mere failure to act with reasonable prudence was not enough. Hence it did not embrace the present case.
Possibly a reference to the European Court of Justice might be required on the precise boundary to be drawn between the states of mind within the scope of Clause 6(1)(e) but that was not a matter which arose on this appeal. So Mr White’s case would succeed.
Lord Mackay agreed with Lord Nicholls.
Lord Cooke said that it was an established rule that, even where a Community Directive does not have direct effect, it is for a United Kingdom court to construe domestic legislation in any field covered by the Directive so as to accord with the interpretation of the Directive, if that can be done without distorting the meaning of the domestic legislation. That was the case even if the Directive did not have direct effect.
The 1988 MIB Agreement was clearly intended by the minister, to the knowledge of the MIB to give effect to the Second Council Directive 84/5/EEC.
An inquiry into what was in the minds of the contracting parties was not the usual approach. The question was an objective one – could the words “knew or ought to have known” fairly be interpreted so as not to extend beyond actual knowledge or a state of mind, such as wilful blindness. Lord Cooke thought the answer was “yes”. The fact that English law (where European Community law had no bearing) interpreted “knew or ought to have known” as including mere negligence did not compel the answer “no”.
Contracts were widely used by public authorities as instruments both of policy and administration, and the increasing employment by the government of contractual techniques to achieve regulatory aims was well recognised by the courts. The MIB Agreement was such an instrument.
Consideration in interpreting an agreement should be given to the matrix of facts, the circumstances with reference to which the words were used; and the object, appearing from those circumstances, which the persons using them had in view. When one added the principle of compatibility with European Community law, there was full justification for holding “ought to have known” in the MIB agreement to be limited to a state of mind tantamount to actual knowledge.
Lord Hope agreed with Lord Nicholls.
Lord Scott dissented. He went over the judgement of the Court of Appeal below and said that he was in full agreement with that court. The Second Motor Insurance Directive did not have direct effect, because the MIB had not been identified in that Directive and the extent of its liability depended on the arrangements made between the UK government and itself.
In relation to the construction point, it was commonplace to say that an agreement should be construed so as to give effect to the intentions, objectively ascertained, of the parties to it. However Lord Scott did not think that this principle could resolve the difference between the words “knew” and “ought to have known”. “Knew” included actual knowledge and blind eye knowledge, but not inadvertence. “Ought to have known” should be taken to connote negligence.
As a consequence Lord Scott would dismiss the appeal.
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