Motor Insurers Bureau - trouble ahead

To avoid problems with the Uninsured Drivers Agreement 1999, solicitors are advised to prepare their own safety nets and keep to limitation periods, say Malcolm Johnson and Donald Williams

On 1 October 2002, the Uninsured Drivers Agreement 1999, the mechanism by which innocent victims of uninsured drivers obtain compensation, will have been in operation for three years.

The actual agreement itself is made between the Motor Insurers Bureau (MIB), which handles the claims, and the government (represented by the former Secretary of State of the Environment, Transport and the Regions).

The agreement applies to England, Wales and Scotland but not other parts of the UK.

The agreement was heavily criticised by claimant lawyers at the time of its introduction.

The clause in the former Uninsured Drivers Agreement 1988, which tended to cause the most difficulty, was clause 5(1), the requirement to give the MIB notice of proceedings within seven days of issue in England and Wales.

The 1999 agreement introduced a whole raft of clauses for the provision of information to the MIB, with fixed time limits.

In particular, clauses 9 to 12 contain a list of items of information which has to be given to the MIB within fixed time limits.

Failure to provide the requisite information within the time limit invalidates the claim.

Clearly the scope for claims to fail has increased.

Barrister Andrew Ritchie wrote in 1999 that the agreement was 'very poorly publicised, not distributed by the MIB to victims and vicious in its terms', while Ian Walker, past president of Association of Personal Injury Lawyers (APIL), wrote the following year: 'The continued existence of this agreement is likely to cause problems for claimants and their lawyers.

It should be replaced by a new agreement that will remedy the defects of the current document.'

More recently, APIL has been alerting practitioners to the pitfalls of the 1999 agreement.

Soon after the 1999 agreement came into operation, the Motor Accident Solicitors Society (MASS) took out judicial review proceedings against the government for, among other things, its failure to consult properly before introducing the 1999 agreement.

Earlier this year, a settlement was reached between the Law Society, APIL and MASS and the minister for transport, whereby the notes for guidance, which come after the text of the 1999 agreement, would be amended so as to relax the terms of the more difficult agreement clauses.

However, MASS has pointed out that the text of the agreement remains unamended and consequently practitioners are advised to follow the agreement rather than the notes for guidance when close to limitation.

Limitation period

The words 'close to limitation' give warning of what may be about to happen.

An accident which occurs on 1 October 1999 is covered by the 1999 agreement.

Proceedings must have been issued before 1 October 2002.

In O'Neill v O'Brien and Another [1997] TLR 149, 21 March, the claimant issued proceedings within the limitation period and entered judgment against the defendant, without informing the MIB.

The appeal court allowed the claimant to re-issue proceedings - this time giving the correct notice - so as to avoid a legal dispute of a needless and technical nature.

An article published by David Holt of Liverpool firm Weightmans - one of the MIB's solicitors - (NLJ 22 October, 1999, p1,566) in answer to Andrew Ritchie's article (see above) stated: 'When MIB met with APIL - including Mr Ritchie - earlier this year, it was agreed that, save in the most unusual circumstances, MIB would not take issue on the notice breach when there was still some considerable time to run on limitation.'

Sometimes proceedings are issued close to limitation and in rare circumstances there is little choice in the matter.

Whatever the merits of the arguments for or against the 1999 agreement, there are bound to be some claims which fail for procedural irregularity after 1 October 1999.

A practitioner in these circumstances may not consider that he or she has done anything negligent, and will be looking to advance any type of argument to that effect.

The problem for the court will be that the 1999 agreement allows either little or no scope for discretion.

European directive

One argument which might be advanced in these circumstances relies upon the effect of the Second Motor Insurance Directive (84/5/EEC) introduced by the European Community to harmonise insurance arrangements between member states.

The directive says that member states are to set up or authorise a body with the task of providing compensation for victims of uninsured drivers, and this led to the introduction of the Uninsured Drivers Agreement 1988.

In Evans v The Secretary of State for the Environment, Transport and the Regions and the MIB [2001] PIQR Sweet & Maxwell, part 1 P33, the question before the court was the discrepancy between compensation awarded under the Uninsured Drivers Agreement 1988 and the Untraced Drivers Agreement 1996.

The first allowed for costs and interest to be awarded, whilst the second did not.

Mr Justice Buckley has referred the matter to the European Court of Justice and a reply is still awaited.

Untraced drivers

In the meantime, the government is set to introduce a new Untraced Drivers Agreement in the next month of so.

This has not yet been published but it is anticipated that the terms of the new agreement will be influenced by what was said in the Evans case.

With regard to the 1999 agreement, it might be argued that this agreement does not comply with EC legislation.

The problem with this argument is that it was very much left to member states to decide how they would implement their own system of compensation.

However, a second argument against the provisions of the 1999 agreement may lie under article 6(1) of the European Convention on Human Rights as incorporated into domestic law by the Human Rights Act 1998.

Article 6(1) provides that everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal, established by law in the determination of his civil rights.

It might be argued that the operation of the 1999 agreement restricts the discretion of the court and its ability to remedy procedural defects to such an extent that there is an effective breach of article 6(1).

Procedural irregularity

A similar point came up in Wilson v The First County Trust Limited [2001] EWCA Civ.

633, where the Court of Appeal considered whether section 127 of the Consumer Credit Act 1974 was incompatible with article 6(1).

The court held that section 127(3) prevented the enforcement by the court of an otherwise valid contract which failed because of procedural irregularity.

Whatever the courts decide, the advice to practitioners must be to prepare their own safety nets.

This can be done firstly by reading and understanding the terms of the 1999 agreement and the revised notes for guidance which are now in force.

Secondly, practitioners must if possible issue their MIB cases well within limitation.

Thirdly, practitioners should treat all claims involving the MIB as a class of their own, meaning they require specialist knowledge.

The new Untraced Drivers Agreement is expected to be published shortly and we hope that this will meet some of the profession's concerns.

Malcolm Johnson is a personal injuries practitioner and principal of Malcolm Johnson & Co, Surbiton.

Donald Williams is a member of the Criminal Injuries Compensation Panel.

- The ninth edition of Donald Williams' book, Guide to Motor Insurers' Bureau Claims, which deals with the new Untraced Drivers Agreement, is scheduled to be published by the Law Society early next year, and the book can be ordered direct from Marston Book Services, tel: 01235 465 656.