No insurance ? No MOT ? No problem in 2017?

The common law on the doctrine of illegality as a defence to liability in its various forms changed last year, but the ramifications of the change have yet to find their way through to the law and practice of credit hire.

It is still frequently raised as an issue in litigation that the claimant is barred from recovering damages for credit hire charges, because at the time of the accident he lacked insurance, or an MOT certificate or was committing some other regulatory road traffic offence. This argument is usually referred to as an “Ahgeampong point” in  reference to Ahgeampong v Allied Manufacturing Limited an unreported decision of His Honour Judge Dean made in the Central London County Court in 2008. The citation of this “authority” probably infringes paragraph 6.2(c) of the Practice Direction (Citation of Authorities) [2001] 1 WLR 1001.

The doctrine of illegality and the correct test for the lower courts to apply was restated in the Supreme Court decision of Patel v Mirza [2016] 3 WLR 399 and that decision is binding on all lower courts.

The essential questions that a lower court must pose itself per paragraph 120 of the judgment of Lord Toulson are to determine whether it would be harmful to the integrity of the legal system, or possibly public morality, to enforce a claim said to be tainted by illegality.

In assessing whether the public interest would be harmed it is necessary (a) to consider the underlying purpose of the prohibition which has been transgressed and whether that purpose will be enhanced by denial of the claim (b) to consider any other relevant public policy on which the denial of the claim may have an impact and (c) to consider whether denial of the claim would be a proportionate response to the illegality, bearing in mind that punishment is a matter for the criminal courts.

In circumstances where a motorist lacks an MOT certificate and has committed an offence under section 47 of the Road Traffic Act 1988, a number of considerations are likely to come into play.

The policy underlying section 47 of the Road Traffic Act 1988 is to ensure that certain parts of motor vehicles used on public roads are in a sound condition. The MOT is no guarantee of roadworthiness as the engine, gearbox and clutch of a vehicle are not subject to inspection and testing.

In most cases the condition of the parts of the motorist’s car subject to inspection and/or the absence of a test certificate will be irrelevant to the causation of the accident which occurred and for which breach of duty may not be in dispute.

In such circumstances the denial of the claim would not enhance the statutory purpose as the condition of the motorist’s vehicle will be irrelevant to the occurrence of the accident and the damage caused to the car by a negligent tortfeasor.

It can also be argued with a degree of force that the general public policy underlying the common law is that tortfeasors who commit the tort of negligence should compensate their victims to the full extent of the loss suffered by them. The application of the doctrine of illegality in the context of a claim for credit hire charges would undermine that policy.

Moreover the general public policy for the compensation of the victims of road traffic accidents established by Parliament is that insurance companies should compensate such victims for their personal injury and property related damage.

In the Road Traffic Act 1988 Parliament has legislated that insurance companies who underwrite compulsory motor liability insurance policies must compensate victims of accidents pursuant to section 151 of the Road Traffic Act 1988, subject to a carefully qualified list of exceptions contained in section 152 of that Act.

No exception to the general principle that an insurance company should pay compensation by reason of the victim not having an MOT certificate is recognised anywhere in the Act. So both the common law and statutory provisions predicate that public policy requires a tortfeasor to compensate the motorist.

It could further be argued that the denial of a claim for credit hire charges would be a disproportionate response to the breach of section 47 of the Road Traffic Act 1988. The offence itself is minor. It is triable summarily and the maximum penalty is a fine on level 3 on the standard scale.

It would also be relevant to consider whether the motorist failed to have a test certificate through oversight or through deliberate or intentional failure.

Another relevant factor is that the absence of a test certificate is unlikely to be central or even peripheral to the accident or tort. Had the motorist’s car been unattended, stationary or unused the tortfeasor would still have been obliged to compensate the motorist.

Finally, there is almost inevitably going to be a marked disparity between the innocent motorist’s and the tortfeasor’s respective culpability. The tortfeasor will have committed both a tort and the criminal offence of driving without due care possibly causing personal injury and certainly causing damage to property.

A further intriguing argument is to consider whether the deployment of the defence of illegality might infringe a motorist’s rights under European Union law. Pursuant to the provisions of the EU Directive 2009/103 EC (“the Sixth Motor Directive”) the United Kingdom is obliged to ensure that an insurance company is liable to compensate a motorist for personal injury and property damage. Pursuant to articles 3 and 18 of the said Directive the insurance company’s obligation to compensate a motorist is given domestic effect through the United Kingdom measure the European Communities (Rights against Insurers) Regulations 2002.

Neither the Sixth Motor Directive nor the domestic Regulations provide for any relevant exclusion or limitation on an insurance company’s liability by reason of a failure to have a test certificate or commission of some other regulatory offence. Moreover the Regulations must be interpreted to give effect to European Union law. It could be argued that a UK court is accordingly precluded from applying the common law doctrine of illegality: as to apply it would be to interfere with the motorist’s right to be compensated granted by European Union law.

In the last 9 years, I am not aware of any appellate authority where the “Ahgeampong point” was considered: it may be another decade before the new approach to illegality is considered in the context of credit hire.

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