James Marson (Reader in Law, Sheffield Hallam University), Katy Ferris (Assistant Professor in Business Law, Nottingham University Business School) and Neil Fletcher (Senior Lecturer, Sheffield Hallam University)

Introduction

While the UK has seen notable legal victories concerning member state liability for breaches of EU law, the ability to hold the state accountable for individual losses remains limited. Establishing a breach significant enough to warrant damages is often a hurdle, except in motor vehicle insurance law. In this area, the UK’s repeated failure to adhere to the Motor Vehicle Insurance Directives (MVID) has resulted in several successful state liability claims. The UK’s implementation of the MVID through the Road Traffic Act 1988 (RTA88) and agreements with the Motor Insurers’ Bureau (MIB) regarding uninsured and untraced drivers is insufficient and constitutes an ongoing violation of EU law. Additionally, the RTA88 fails to encompass the 2014 CJEU ruling in Vnuk, which mandates compulsory third-party insurance for vehicles used exclusively on private land, a ruling recently upheld by the High Court in Lewis v Tindale despite the MIB’s opposition.

The Lewis ruling, however, will likely become irrelevant post-Brexit. If the UK exits the EU without a deal preserving Single Market membership, the restrictive interpretation of the RTA88 will take precedence. This conflicting approach was evident in the Supreme Court’s R & S Pilling v UK Insurance case, where the court, while reaching a practical decision, chose not to apply EU law or broaden the RTA88’s scope, despite previous arguments suggesting its feasibility. Although acknowledging the need for Parliament to align the RTA88 with the Directive, this case exemplifies the UK’s reluctance to fully embrace EU law in this area.

Brexit, therefore, threatens crucial protections for third parties involved in accidents with uninsured or untraced drivers. EU membership is the only guarantee for upholding these protections, as evident in numerous breaches highlighted in cases like Roadpeace and Delaney v Pickett. The UK’s withdrawal from the EU will also mean the loss of state liability as a means of redress.

Motor Vehicle Insurance Extending its Reach?

English law mandates third-party motor vehicle insurance for use on public roads and places, encompassing areas like campsites, car parks, and even dockyards. This requirement, stemming from the 1930 Road Traffic Act (the precursor to the MVID), was expanded to include public places following a Court of Appeal decision, but excluded vehicles used exclusively on private land. However, a late 2018 High Court ruling reversed this, extending mandatory insurance to vehicles on private land.

The European Union Interpretation

This shift aligns with the 2014 CJEU ruling in Vnuk, where a Slovenian farmworker injured by a tractor on private land was entitled to compensation despite Slovenian law not mandating insurance for such vehicles. The CJEU determined that “use of vehicles” in the MVID encompassed any use consistent with a vehicle’s normal function, thereby significantly expanding the scope of compulsory insurance.

Two earlier cases in Portugal further illustrate this interpretation. In Juliana, the CJEU ruled that even an unused, privately stored vehicle still capable of operation requires insurance. In Andrade, involving a stationary tractor causing a fatal accident, the court clarified that “use” is not determined by terrain and includes any use as transport. However, the CJEU stated that vehicles serving both transport and work-related purposes are only subject to compulsory insurance when primarily used for transport, thus denying compensation in Andrade as the tractor’s engine was powering equipment, not transport.

Despite these rulings, English law, lacking comprehensive accident data for private land, hasn’t fully aligned with Vnuk. The protection of third parties in accidents involving non-road-registered vehicles (like quad bikes or vehicles used solely for agriculture or construction) remains inadequate, highlighting the discrepancy between EU and UK law.

The UK Approach

While the UK generally supports protecting third-party victims through the MIB, which compensates when the responsible driver is uninsured or untraceable, the UK’s interpretation of EU law in this area is inconsistent. The RTA88’s definition of “motor vehicle” is too narrow, and while it lists specific insurance exclusions to protect victims, the Court of Appeal’s restrictive interpretation in EUI v Bristol Alliance Partnership allows insurers to evade responsibility by adding exclusions not expressly listed.

This approach contradicts established CJEU jurisprudence. In cases like Bernaldez, Correia Ferreira v Companhia de Seguros Mundial Confiança SA, Candolin v Vahinkovakuutusosakeyhtio Pohjola, Farrell v Whitty, and Churchill v Wilkinson and Tracey Evans, the CJEU consistently maintained that the only valid exclusion to third-party claims is the third party’s knowledge that the vehicle was stolen. The CJEU’s interpretation of the void exclusions list in the MVID as illustrative aimed to strengthen the civil liability requirements.

This inconsistency in applying EU law is problematic, as seen in conflicting judgments like Allen v Mohammed and Allianz Insurance and others that rigidly adhere to national provisions, creating uncertainty regarding the Vnuk ruling’s impact and the post-Brexit landscape.

‘New’ Rights and Obligations in 2019?

This uncertainty lessened with the High Court’s September 2018 ruling in Lewis v Tindale, where compensation was awarded to a claimant injured by an uninsured driver on private land. The court deemed the MIB, as an “emanation of the State,” subject to EU law and responsible for compensating victims of accidents on private land. This ruling necessitates legislative action to clarify the MIB’s responsibilities and extend insurance coverage to a broader range of vehicles.

The ruling’s broader implications include potentially increased police involvement on private land to enforce insurance regulations, allowing for prosecutions previously not covered by criminal sanctions. However, questions arise regarding the definition of “normal use” and “transport” in relation to the Vnuk and Andrade rulings.

Clarification is expected from the Court of Appeal’s hearing of the Lewis case in May 2019. The UK’s future relationship with the EU will also heavily influence the outcome. Continued EU membership or a deal retaining Single Market access will likely necessitate insurance for all motor vehicles. However, a no-deal Brexit or a Customs Union arrangement could lead to changes in the government’s post-Brexit plans.

Regardless of the eventual result, the current EU stance and High Court ruling suggest that liability coverage is advisable for any motor vehicle, even those used solely on private land. Without it, the burden of compensation falls on the MIB, ultimately impacting insurance premiums for everyone.

Photo credit: Insurance Times