One of the practical aspects of Brexit will be the effect the departure of the United Kingdom from the European Union has on the development of road traffic insurance law.
Devotees of road traffic litigation will be well aware that the scope of insurance law within the United Kingdom is largely set by this country’s obligations under European Union law.
Under a series of directives now consolidated in the Sixth Motor Insurance Directive to be found here: Directive 2009 103 EC relating to insurance against civil liability in respect of the use of motor vehicles and the enforcement of hte obligation to insure against such liability the United Kingdom government is under an obligation to legislate to a common standard with other European Union member states to ensure a common level of protection throughout the European Union is provided to the victims of motor accidents.
This is an obligation which has often been honoured in the breach, as much as in the observance. There have been a string of cases over the last 20 years where the adequacy of domestic provision of road traffic insurance, in the scheme provided by the Road Traffic Act 1988 and under the MIB arrangements have been tested in the appellate courts.
There remain some compelling arguments that even today there are a number of aspects of the Road Traffic Act 1988 which do not comply with the parent European Union directive.
One point concerning the scope of insurance required under the Sixth Motor Insurance Directive, reached the European Court of Justice in the case of Damijan Vnuk v Zavarovalnica Triglav d.d Case C-162/13 from the courts of Slovenia. A full copy of the judgment can be found here: Damijan Vnuk v Zavarovalnica Triglav dd Case C-162-13 but the essential facts of the case can be summarised from the judgment as follows:
19. It is apparent from the order for reference that, on 13 August 2007, when bales of hay were being stored in the loft of a barn, a tractor to which a trailer was attached, which was reversing in the courtyard of the farm in order to position the trailer in that barn, struck the ladder on which Mr Vnuk had climbed, causing him to fall. Mr Vnuk brought an action seeking payment of the sum of EUR 15 944.10 as compensation for his non-pecuniary damage, together with default interest, against Zavarovalnica Triglav, the insurance company with which the owner of the tractor had taken out compulsory insurance.
20. The first-instance court dismissed that application. The second-instance court dismissed the appeal that Mr Vnuk lodged against that judgment, stating that a compulsory insurance policy in respect of the use of a motor vehicle covered damage caused by the use of a tractor as a means of transport, but not damage caused when a tractor is used as a machine or propulsion device.
21. The referring court granted Mr Vnuk leave to appeal on a point of law against the decision of the second-instance court in so far as that appeal related to the question of the use of a tractor as a ‘vehicle’ within the meaning of Article 15 of the ZOZP.
22. Before the referring court, Mr Vnuk submits that the concept of ‘use of a vehicle in traffic’ cannot be restricted to journeys on public roads and that, in addition, at the time the harmful event at issue in the main proceedings occurred, the unit formed by the tractor and its trailer did indeed constitute a vehicle that was moving and that what was involved was the end of the journey. By contrast, Zavarovalnica Triglav submits that the case in the main proceedings concerns the use of a tractor not in its function as a vehicle for road use, but for work in front of a barn on a farm.
23. The referring court observes that the ZOZP does not define the concept of ‘use of vehicles’, but that that lacuna is filled by the case-law. It states, in that regard, that the primary purpose of compulsory insurance under the ZOZP is to shift the cost of risk to society and the necessity of taking care of the needs of persons injured and passengers on public roads. The referring court takes the view that, according to Slovenian case-law, for the purpose of assessing whether specific damage is covered by compulsory insurance, the question whether it occurred on a public road is not, however, decisive. There is, however, no compulsory insurance cover when a vehicle is used as a machine, for example in a farming area, because, in such cases, there is no road use.
24. The referring court points out that the various Directives relating to insurance against civil liability in respect of the use of motor vehicles — namely the First to Third Directives, the Fourth motor insurance Directive and Directive 2005/14 (taken together, ‘the Directives relating to compulsory insurance’) — refer to ‘use’, to ‘road traffic’ or even to ‘users of the road’, but do not specify what may be regarded as the use of a motor vehicle and which is the decisive criterion in that regard. It is thus possible to take the view that compulsory insurance covers damage caused by a vehicle in the context of road use alone or that it covers any damage, however connected to the use or the operation of a vehicle, irrespective of whether the situation may be defined as a situation involving road use.
25. In those circumstances the Vrhovno sodišče (Supreme Court) decided to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling:
‘Must the concept of “the use of vehicles” within the meaning of Article 3(1) of [the First Directive] be interpreted as not extending to the circumstances of the present case, in which the person insured by the defendant struck the applicant’s ladder with a tractor towing a trailer while hay was being stored in a hayloft, on the basis that the incident did not occur in the context of a road traffic accident?’
The Court of Justice went onto answer the question in the following way:
50. The First Directive is therefore part of a series of directives which came progressively to define the obligations of Member States concerning civil liability in respect of the use of vehicles. Although the Court has repeatedly held that it is apparent from the recitals in the preambles to the First and Second Directives that the aim of those directives is to ensure the free movement of vehicles normally based on European Union territory and of persons travelling in those vehicles, it has also repeatedly held that they also have the objective of guaranteeing that the victims of accidents caused by those vehicles receive comparable treatment irrespective of where in the European Union the accident occurred (see, inter alia, to that effect Ruiz Bernáldez, C–129/94, EU:C:1996:143, paragraph 13, and Csonka and Others, C–409/11, EU:C:2013:512, paragraph 26 and the case-law cited).
51. Although it is apparent, inter alia, from the fifth to seventh recitals in the preamble to the First Directive that that directive sought to liberalise the rules regarding the movement of persons and motor vehicles between Member States with a view to the creation of an internal market, by abolishing the checks on green cards which were carried out at the borders of Member States, it pursued equally the objective of protecting victims (see, to that effect, Ruiz Bernáldez, EU:C:1996:143, paragraph 18).
52. Furthermore, the development of the European Union legislation concerning compulsory insurance shows that that objective of protecting the victims of accidents caused by vehicles has continuously been pursued and reinforced by the European Union legislature.
53. That is apparent, in particular, firstly from Articles 1 to 3 of the Second Directive. Accordingly, Article 1 of the Second Directive required the insurance referred to in Article 3(1) of the First Directive to cover both damage to property and personal injuries. It also required the Member States to set up bodies with the task of providing compensation for damage caused by unidentified vehicles or vehicles for which the insurance obligation had not been satisfied and established the minimum amounts of compensation to be guaranteed. Article 2 of that directive restricted the scope of certain exclusion clauses provided for by legislation or in contracts in respect of claims by third parties who were victims of an accident caused as a result of the use or driving of the insured vehicle by certain persons. Article 3 of that directive extended the benefit of insurance in respect of personal injuries to the members of the family of the insured person, driver or any other person who is liable for the accident.
54. Secondly, the Third Directive, through Article 1, inter alia extended insurance cover to personal injuries to all passengers, other than the driver and the Fourth motor insurance Directive, among other things, introduced in its Article 3 a direct right of action by injured parties against the insurance undertaking covering the responsible person against civil liability.
55. Lastly, Directive 2005/14, through Articles 2 and 4, which amended respectively the Second and Third Directives, inter alia, adjusted the minimum amounts of compensation to be guaranteed and provided for their regular review, extended the scope of the payment of compensation by the body established by the Second Directive and extended the insurance cover referred to in Article 3(1) of the First Directive to personal injuries and damage to property suffered by pedestrians, cyclists and other non-motorised users of the roads. It also inserted a new restriction on the possibility of applying certain exclusion clauses to the insurance cover and prohibited excesses from being relied on against the injured party to an accident as far as the insurance referred to in Article 3(1) of the First Directive is concerned.
56. In the light of all of those factors, and in particular of the objective of protection pursued by the First to Third Directives, the view cannot be taken that the European Union legislature wished to exclude from the protection granted by those directives injured parties to an accident caused by a vehicle in the course of its use, if that use is consistent with the normal function of that vehicle.
57. In that regard, it is also important to point out that, according to part A of the Annex to Directive 73/239, as amended by Directive 84/641, the class of direct insurance activity relating to ‘Motor vehicle liability’ concerns ‘[a]ll liability arising out of the use of motor vehicles operating on the land (including carrier’s liability)’.
58. In the present case, it must be pointed out that, firstly, as is apparent from information published by the Commission, the Republic of Slovenia did not, pursuant to Article 4(b) of the First Directive, exclude any type of vehicle from the scope of Article 3(1) of the First Directive. Secondly, according to the information provided by the referring court, the accident which gave rise to the dispute in the main proceedings was caused by a vehicle reversing, for the purpose of taking up a position in a specific location, and, therefore seems to have been caused by the use of a vehicle that was consistent with its normal function, this, however, being a matter for the referring court to determine.
59. Accordingly, in the light of all of the foregoing considerations, the answer to the question referred is that Article 3(1) of the First Directive must be interpreted as meaning that the concept of ‘use of vehicles’ in that article covers any use of a vehicle that is consistent with the normal function of that vehicle. That concept may therefore cover the manoeuvre of a tractor in the courtyard of a farm in order to bring the trailer attached to that tractor into a barn, as in the case in the main proceedings, which is a matter for the referring court to determine.
It will be noted that the effect of the judgment was to dramatically broad the scope of the circumstances, in which a vehicle is required to have compulsory motor insurance.
In particular as an example of the increase in scope of insurance law that the judgment has effected victims of uninsured or untraced drivers on private land will now be entitled to a remedy.
In the context of insured drivers the judgment has already led to inventive attempts to secure indemnities from the domestic courts, in circumstances, where prior to the judgment it would not have been thought possible to mount the argument: see in particular the case of UK Insurance v Thomas Holden and Another [2016] EWHC 264 (QB).
So alarming are the possible implications (and the magnitude of Francovich style claims against the United Kingdom, for non-implementation of European Union law) that the government last month published a consultation document on possible reforms to the Road Traffic Act 1988. You can read the proposals here: Department of Transport Technical consultation on motor insurance Consideration of the European Court of Justice ruling in the case of Damijan Vnuk v Zavarovalnica Trigla
Reading the document, although it pleasingly uses that awful phrase “game changer” to describe the effects of the Vnuk judgment it is interesting to note that the government both apparently hopes that (i) Brexit will cause the problem to go away but (ii) that in the interim it is probably going to have to act by way of legislation.