horwich farrelly

Cameron v Hussain and another – a highly significant decision

May, 23, 2017

In a landmark ruling the Court of Appeal has held that in certain circumstances a claimant can bring proceedings against an unidentified driver of an identified vehicle in order to enforce judgment against the RTA insurer of that vehicle.

History

This appeal arose out of an unremarkable RTC claim by the claimant appellant Bianca Cameron. On 26 May 2013 there was a collision between the claimant driving her car and another motorist, driving a Nissan Micra. That driver went on to hit another vehicle, but did not stop.  However, the vehicle registration number of the Nissan was taken down by a passing taxi driver. As a result of the collision, the claimant suffered modest personal injuries as did the passengers in her car. In addition, her own car was written off and she incurred charges for the hire of a replacement car.  The total value of the claimant’s claim (which excluded any claim by her passengers) was estimated at between £10,000 and £15,000.

The police found the Nissan to be registered to the first defendant but he did not co-operate with police enquiries into the collision, and on 19 November 2013 he was convicted of the offence of failing to give information about the identity of a driver. The first defendant’s car was insured by the respondent Liverpool Victoria Insurance. That insurance was obtained by fraud and LV could, had they elected to do so, obtained a section 152 declaration but choose not to exercise such a right, presumably because the driver was not identified and therefore an RTA liability was not envisaged.

In January 2014 the claimant issued proceedings claiming damages against the first defendant, because at that time she believed him to be the other driver involved in the collision. In March 2014, the claimant amended the proceedings to add LV as second defendant and to seek a declaration against it pursuant to section 151 Road Traffic Act 1988 to the effect that it was obliged to satisfy any unsatisfied judgment against the first defendant.

In May 2014 LV filed a defence denying its liability to satisfy any judgment against the first defendant. This was on the grounds: (a) that the first defendant was not covered to drive the Nissan under the terms of the policy and, more importantly (b) that the claimant was unable to prove the identity of the driver at the time of the accident. Thereafter on 4 June 2014 LV issued an application for summary judgment on the basis of the arguments in its defence.

On 19 June 2014 the claimant made a cross-application for permission to amend her claim form and the particulars of claim so as to substitute, for the first defendant:

The person unknown driving vehicle registration number Y598 SPS who collided with vehicle registration number KG03 ZIZ on 26th May 2013.

On 16 July 2014 a district judge dismissed the claimant’s application to substitute the name of the first defendant for that of an unidentified party and granted summary judgment against the claimant on LV’s application. On 13 January 2015 a judge dismissed an appeal by the claimant against that decision. By the time of that hearing it was common ground that the first defendant was not the driver of the vehicle on the relevant date.

The grounds for the appeal

The claimant relied upon three grounds of appeal:

  • Ground 1: English civil procedure permitted proceedings to be issued and orders (including judgments) to be made against unnamed parties where it is necessary and efficacious to obtain justice.
  • Ground 2: It was both necessary and efficacious to allow the claimant to proceed against an unnamed defendant in the particular circumstances of this case.
  • Ground 3: Permitting the claimant to proceed was consistent with the policy of section 151 of the 1988 Act.

The outcome

Finding in favour of the claimant, a majority of the Court of Appeal held that in a case such as the present, the court could and should, in accordance with principle, exercise its procedural powers to permit an amendment of the claim form (and the consequent amendment to the particulars of claim) to allow a claimant to substitute an unnamed defendant driver, identified by reference to the specific vehicle which he or she was driving at a specific time and place, and consequently to enable a judgment to be obtained against such a defendant, which an identified insurer would then be required to satisfy pursuant to the provisions of section 151 of the 1988 Act.

The court held that it was entirely consistent with the policy of the 1988 Act that an identified insurer’s liability under section 151 in relation to a policy of insurance, written in respect of a specific vehicle and a specific named insured, should not depend on whether, as at the date of issue of the proceedings, or thereafter, the claimant can identify the tortfeasor driver by name.

There was no reason in principle why, in appropriate cases, it should not be permissible under the CPR for a claimant to bring proceedings against an unnamed defendant, suitably identified by an appropriate description. The fact that the CPR might make express provision for situations in which this could take place did not preclude orders being made against unnamed defendants in other circumstances. Likewise, there was no reason in principle, or as a matter of construction of the rules, why the ability to do so should be limited to a claim for an injunction or in relation to future relief.

Accordingly it was held that the approach adopted by both the district judge and the judge were flawed. The claimant was granted permission to amend her claim form and particulars of claim so as to substitute, for the named first defendant, an unnamed defendant.   Subject to any appeal which may be made by LV to the Supreme Court, this will mean that LV will now have to compensate the claimant for her losses.

The majority of the Court of Appeal held that the scheme of compensation under the Untraced Drivers’ Agreement 2003 did not provide the claimant with sufficient redress and/or in any event the availability of compensation via the 2003 Agreement was not an important consideration.  In doing so the court rather contradicted the recent Court of Appeal decision in Sahin v Havard [2016] EWCA Civ 1202.

The majority of the Court of Appeal seemed to have no sympathy with insurers, highlighting that it was simply incumbent upon them to assess the risks they were willing to take on. That viewpoint does not reflect the difficulties insurers face with fraudulent policy inceptions where no premium income is ever received and the cost of the claims arising out of those policies is ultimately passed on to the consumer who does properly insure their vehicles.

Comment

This is a landmark ruling which drives a ‘coach and horses’ through the entire collective scheme for compensating victims of uninsured and/or untraced motorists.

The decision is stated to apply only to cases where an insurer might have a liability under section 151 of the 1988 Act. However it seems inevitable that claimants will seek to argue that the same principles should apply to claims brought under the Uninsured Drivers’ Agreement 1999 or 2015.  That will be of concern to the MIB and Article 75 insurers.  However pending resolution of this issue, an insurer faced with a claim involving an unidentified driver but an identified vehicle will no doubt seek to reduce their status to Article 75 insurer where they are able to.

According to Lloyd Jones LJ the judgment “would be limited to cases where the vehicle driven by the tortfeasor was insured and where the insured and the registered owner are identifiable.” We can see claimants quickly seeking to extend the principle to uninsured vehicles and/or vehicles which have no registered keeper.

The Court of Appeal seemed disinterested in the concerns raised by LV about a decision in favour of the claimant opening up the possibility of fraudulent claims being brought more easily.  In our respectful opinion, it appears that the court were naïve as to the problems faced by insurers, particularly given the multitude of different frauds sought to be perpetrated against them and the sense, at least by some, that insurers are simply “fair game”.

This decision will have consequences for many suspected fraudulent claims that are currently being defended. The nature of cases involving fictitious defendant drivers often means that there may not be any direct evidence of fraud by the claimant but the case could continue to be defended in the knowledge that the claimant could not obtain judgment if it could not be established that the pleaded defendant existed. Such claims will now need to be reviewed. Further, we could now see increased frequency of this type of fraudulent claim. Application fraud is already high on insurer’s agendas and this decision only heightens the importance of detection at an early stage.

It is also likely to lead to a rise in Claims Farming/Late Intimation claims. CMC’s will no longer need to ‘vish’ for a defendant drivers details. Claims which may previously have been abandoned for lack of those details could now be pursued.

The Untraced Drivers’ Agreement 2003 had a requirement for a victim to have reported the matter promptly to the police under Clause 4(3). Whilst such a requirement is rather watered down in the 2017 Agreement, there are no similar safeguards with a claim under the 1988 Act and/or the Uninsured Drivers’ Agreement.

The Court of Appeal’s decision does not deal with the specifics of how a claimant would go about suing an unidentified driver of an identified vehicle. However it is implicit in the judgment that the permission of the court would be required along with an order for substituted service.  We would hope that the court would always require substituted service on the insurer to ensure that the insurer had every opportunity to defend the claim and/or seek to set aside any order permitting proceedings against an unidentified driver.   Ideally such applications should be made on notice to the insurer and that there was at least scope for the matter to be dealt with by consent. It is a pity that the Court of Appeal were not alive to the need to set out specific safeguards for insurers, particularly where a claimant might not otherwise seek to engage with the insurer.

Of course there is also a requirement for the insurer to have notice of the commencement of the proceedings pursuant to section 152(1)(a) of the 1988 Act.  The decision does not specify what notice would be required. Given the lack of a name and address for the proposed defendant, we would submit that it should be essential for the claimant to provide full particulars, e.g. by providing a copy of the proceedings. Again, we respectfully suggest that the Court of Appeal has failed to consider the practicalities of how their decision would operate in practice.

This decision will cause difficulties for insurers seeking to investigate claims in a speedy fashion (e.g. because there is ongoing hire).  Consideration may also be required as to how such claims might be brought pursuant to the Portal process.

It will be interesting to see whether claimants continue to proceed on the misapprehension that they can pursue an insurer direct under the European Communities (Rights against Insurers) Regulations 2002 where they cannot identify the tortfeasor. We consider that claimants are still not permitted to rely on these Regulations unless they can show the tortfeasor is an “insured person”. Moreover they should not need to seek to rely on the Regulations but it remains to be seen whether instead efforts to rewrite the Regulations to suit a claimant’s agenda continue.  That may indeed be the case because this decision does not provide a very swift and/or cost-effective means to commence proceedings – both relevant factors to low-value cases subject to fixed fees.

Will this decision end up applying to Scotland which is subject to entirely separate procedural rules? No doubt pursuers will seek to pursue such arguments in Scotland and indeed Northern Ireland.

There is also the issue of limitation to consider. Section 11 of the Limitation Act 1980 provides a limitation period of three years from the date of knowledge of the victim. Section 14 then defines ‘knowledge’ as including (c) “the identity of the defendant”.  Does the effect of this decision mean that a claimant who was injured by an unidentified driver of an identified vehicle several years can now proceed with a litigated claim because limitation simply does not apply? If so that poses no end of difficulties and uncertainties.

On a related issue, will the MIB now seek to pass onto its members claims involving an unidentified driver of an identified vehicle which hitherto it had been handling under the Untraced Drivers’ Agreement or has already settled? We would envisage that the Technical Committee of the MIB will be asked to decide upon a rule to apply to all members in due course in order that a fair and consistent approach is maintained. It may however be necessary for insurers to consider their reserves in respect of claims previously considered closed.   Longer-term the MIB may need to consider whether changes are required particularly to the Uninsured Drivers’ Agreement 2015 to provide additional safeguards against the risk of fraud.

The above all assumes that LV do not appeal this decision. If they do (and it will most likely require leave from the Supreme Court), the position may end up being uncertain for a year or two. If that is the case, victims of unidentified drivers of identified vehicles may need to consider whether they are still better off pursuing their claim under the Untraced Drivers’ Agreement, at least on a provisional basis subject to the MIB’s (likely) agreement, pending ultimate resolution of the issue.

All these uncertainties are an inevitable consequence of such a significant change in a legal principle going back to the very introduction of the Road Traffic Act 1930. Ultimately insurers will need to consider cases on a case by case basis and be vigilant to those seeking to exploit the decision in ways not envisaged by the majority of the Court of Appeal.

Contact us

If you would like further information about any of our specialists or the services we offer please get in touch.