Motor insurance - Compulsory insurance against third party risks - Claimants being insured under policies of motor insurance
Churchill Insurance Company Ltd v Wilkinson; Evans v Equity Claims Ltd: CA (Civ Div) (Lord Justices Maurice Kay (vice-president), Etherton, Aikens): 24 August 2012
Section 151 of the Road Traffic Act 1988, so far as material, provides: ‘(1) This section applies where, after a certificate of insurance or certificate of security has been delivered under section 147 of this act to the person by whom a policy has been effected or to whom a security has been given, a judgment to which this subsection applies is obtained… (5) Notwithstanding that the insurer may be entitled to avoid or cancel, or may have avoided or cancelled, the policy or security, he must, subject to the provisions of this section, pay to the persons entitled to the benefit of the judgment – (a) as regards liability in respect of death or bodily injury, any sum payable under the judgment in respect of the liability, together with any sum which, by virtue of any enactment relating to interest on judgments, is payable in respect of interest on that sum; (b) as regards liability in respect of damage to property, any sum required to be paid under subsection (6) below; and (c) any amount payable in respect of costs… (8) Where an insurer becomes liable under this section to pay an amount in respect of a liability of a person who is not insured by a policy or whose liability is not covered by a security, he is entitled to recover the amount from that person or from any person who – (a) is insured by the policy, or whose liability is covered by the security, by the terms of which the liability would be covered if the policy insured all persons or, as the case may be, the security covered the liability of all persons, and (b) caused or permitted the use of the vehicle which gave rise to the liability.’
The instant appeals concerned the proper interpretation of section 151(8) of the Road Traffic Act 1988 in order to make it compatible with Council Directive (EEC) 72/166, Council Directive (EEC) 84/5, Council Directive (EEC) 90/232 and Council Directive (EC) 2009/103 (the European directives). The appeals were referred to the Court of Justice of the European Union (CJEU) (see Churchill Insurance Co Ltd v Wilkinson; Evans v Equity Claims Ltd ( All ER (D) 171 (May))).
In Churchill Insurance Co Ltd v Wilkinson; Evans v Equity Claims Ltd (C-442/10) (the CJEU decision), the CJEU determined that the European directives precluded national rules whose effect was to ‘omit automatically’ the requirement that an insurer should compensate a passenger who was a victim at the time of a road traffic accident, even when that accident was caused by a driver not insured under the insurance policy and when the victim, who was a passenger, was insured to drive the vehicle himself and had given permission to the uninsured driver to drive it.
Further, the CJEU declared that the answer would be the same if the insured victim was aware that the person to whom he had given permission to drive the vehicle was not insured to do so. Accordingly, the Court of Appeal was required to determine the appeals in light of the CJEU decision. The issues for determination were whether section 151(8) of the act could be interpreted in a way that made it compatible with the European directives, and, if so, how section 151(8) of the act should be interpreted.
The court ruled: Section 151(8)(b) of the act would be interpreted as notionally including, after the words ‘cause or permitted the use of the vehicle which gave rise to the liability’, the words ‘save that where the person insured by the policy may be entitled to the benefit of any judgment to which this section refers, any recovery by the insurer in respect of that judgment must be proportionate and determined on the basis of the circumstances of the case’ (see  of the judgment).
The effect of section 151(8) was to grant the insurer the right to claim a civil indemnity in circumstances where the insured had caused or permitted an uninsured driver to use the vehicle which gave rise to the liability. In a case where an insured passenger victim had either caused or permitted the uninsured driver to use the vehicle which had given rise to the liability that the insurer had to meet under section 151(5) of the act, then section 151(8) of the act was a right based on the insured passenger victim’s ‘contribution’ to the ‘occurrence of the loss’.
Therefore, section 151(8) of the act would be interpreted in a manner which had both retained the ability of an insurer to utilise its right to obtain an indemnity from an insured when he was not a passenger victim and had not affected the passenger victim’s right to compensation through compulsory motor insurance, but had also ensured that in the case of the insured passenger victim, section 151(8) of the act had complied with the restriction envisaged by the CJEU decision (see  of the judgment).
Accordingly, a declaration would be made on the correct construction of section 151(8)(b) of the act (see  of the judgment). Applying that construction of section 151(8) of the Act to the circumstances of the instant appeals, the appeals would be allowed (see  of the judgment). Decision of Blair J  1 All ER 198;  All ER (Comm) 278 reversed.
Stephen Worthington QC and Fergus Randolph QC (instructed by Keoghs) for the insurer in the first appeal; Stephen Grime QC and Conor Quigley QC (instructed by Potter Rees) for the claimant in the first appeal; Conor Quigley QC and William Waldron QC (instructed by Jerome Solicitors Ltd) for the claimant in the second appeal; Winston Hunt QC (instructed by Herzog & Associates, Liverpool) for the insurer in the second appeal; Brian Kennelly and Judith Ayling (instructed by the Treasury Solicitor) for the secretary of state as intervener.