Clause 6(1)(e)(iii) of the Motor Insurers’ Bureau (Compensation of Victims of Uninsured Drivers) Agreement 1999, made between the Motor Insurers’ Bureau and the Secretary of State for Transport and which provided an exclusion from liability for compensation for the Motor Insurers’ Bureau, was incompatible with Council Directive 72/166/EEC, Second Council Directive 84/5/EEC and Third Council Directive 90/232/EEC.

Jay J, sitting in the Queen’s Bench Division, so held in determining preliminary issues in a claim brought by the claimant, Sean Delaney, against the defendant, the Secretary of State for Transport, for damages in respect of compensation being denied him for the personal injuries he sustained following a road traffic accident.

The claimant had been the passenger in a car which, owing to the driver’s negligence, was involved in a serious road traffic accident. The claimant sustained severe personal injuries. The emergency services found cannabis under the claimant’s jacket but the claimant was not charged. The driver held a policy of insurance with Tradewise. Tradewise obtained an order to the effect that it was entitled to avoid the policy of insurance and the matter came within the scope of the Motor Insurers’ Bureau (“MIB”) as insurer of last resort under the Motor Insurers’ Bureau (Compensation of Victims of Uninsured Drivers) Agreement 1999, made between it and the Secretary of State. Clause 6(1)(e) of the 1999 Agreement provided exceptions for MIB’s liability in respect of claims for personal injuries brought by passengers against the driver and clause 6(1)(e)(iii) provided an exception where “the vehicle was being used in the course or furtherance of a crime”. The claimant commenced county court proceedings against the driver and Tradewise. The judge dismissed those claims, holding that the defence of ex turpi causa succeeded and that the claimant knew or ought to have known that the vehicle was being used in the course or furtherance of crime, so that clause 6(1)(e)(iii) of the 1999 Agreement was applicable. On appeal, the Court of Appeal allowed the appeal on the ex turpi causa issue but dismissed it on the clause 6(1)(e)(iii) issue.The claimant issued proceedings against the defendant, alleging that clause 6(1)(e)(iii) was incompatible with, and so the defendant was in breach of, article 1(4) of Directive 84/5. The court was asked to determine preliminary issues, including, (i) whether the exclusion under clause 6(1)(e)(iii) of the 1999 Agreement was in breach of articles 1(4) and 2(1) of Second Council Directive 84/5/EEC of 30 December 1983 on the approximation of the laws of the member states relating to insurance against civil liability in respect of the use of motor vehicles, article 3(1) of Council Directive 72/166/EEC of 24 April 1972 on the approximation of the laws of member states relating to insurance against civil liability in respect of the use of motor vehicles, and to the enforcement of the obligation to insure against such liability and article 1 of Third Council Directive 90/232/EEC of 14 May 1990 on the approximation of the laws of the member states relating to insurance against civil liability in respect of the use of motor vehicles (“the Directives”).

JAY J said that it was clear from numerous decisions of the Court of Justice of the European Union that a situation could not arise whereby the insurer’s avoidance of liability left the victim without a remedy. Those decisions applied to the obligations of the relevant national body if the victim had no remedy against the insurer under domestic law. The Directives imposed obligations on member states in respect of damage cause by vehicles in relation to which a valid policy of insurance was taken out but was subsequently avoided by the insurer. The Directives required those members states to ensure that compensation was paid in all circumstances save those expressly set out as exclusions in the Directives. Accordingly, clause 6(1)(e)(iii) of the 1999 Agreement was not consistent with the Directives and the defendant was in breach of EU law. Damages were to be assessed.