Kerry Underwood

VOID INSURANCE DOES NOT PREVENT SERVICE ON INSURER WHEN DRIVER UNIDENTIFIED

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In Farah v Abdullahi & Ors [2018] EWHC 738 (QB)

Master Davison allowed service on an insurer of an unidentified driver in circumstances where the insurer had already obtained a declaration that the insurance policy was void.

This follows the decision in

Cameron v Hussain [2017] EWCA Civ 366

where the Court of Appeal held that the claimant, a victim in a road traffic accident, could add as a defendant a person who could only be described as “the person unknown driving vehicle registration number Y598 SPS who collided with vehicle registration number KG03 ZIZ on 26th May 2013”.

There, as here, the circumstances were that the claimant could not identify the driver, but could identify both the car and an insurer who had provided insurance cover for the vehicle at the time of the accident.

An important part of that case was the fact that a section 151 insurer, that is an insurer who, in spite of the fact that the use of their vehicle was outside the scope of the contract of insurance, was statutorily liable to meet the claim.

The case of

Bloomsbury Publishing Group Ltd. & Anor v News Group Newspapers Ltd. & Ors [2003] EWHC 1205 (Ch)

had established that there was no procedural bar to issuing proceedings and obtaining orders against persons unknown.

Here the Master said that the principal question was whether he should permit the claim to proceed even though the insurer had already obtained a declaration that it was entitled to avoid the policy from the beginning on the grounds of material non-disclosure.

Consequently, on the face of it, there was no section 151 insurer.

In those circumstances the Master had to consider whether the claim against the unnamed third defendant should be allowed to proceed.

The Master said:

“It seems to me that it would be both efficacious and consistent with the overriding objective to allow the claim to go forward in that way. The entitlement of a claimant to proceed against an unnamed driver should not depend on the section 151 liability of the insurer being incontrovertibly established.”

The Master also rejected an argument that permission of the court was required in order to issue against an unnamed party.

As well as being a sensible and a just decision, the judgment also gives helpful guidance about section 151 liabilities and also that the section 152(2) exception is incompatible with the Sixth Motor Insurance Directive 2009/103/EC:

 

 

8.   Section 151 of the Road Traffic Act 1988 provides that insurers must meet judgments in respect of insured third party liabilities even if the insurer is not liable to its insured as a matter of contract. A typical situation would be where the person driving was a partner or friend who was not actually a named driver on the policy. The insurer would have to meet a claim under section 151 in respect of liabilities incurred by such a driver. Indeed, section 151 would even extend to driving by a thief. But there are various “get-outs” for insurers. The relevant one for present purposes is contained in section 152(2). By that sub-section, (paraphrasing it), if a policy has been obtained by misrepresentation or failure to disclose material facts, then, if the insurer obtains a declaration that it is entitled to avoid the policy on these grounds, “no sum is payable … under section 151”. There are time limits to be observed if an insurer wishes to take advantage of section 152(2). The insurer must commence the action for a declaration “before or within three months after the commencement of” the proceedings leading to the judgment in favour of the victim of the road accident.

  1. There is an issue as to whether section 152(2) is compatible with the Sixth Motor Insurance Directive 2009/103/EC. The Directive (which is a consolidating measure) imposes on Member States an obligation to ensure that civil liability in respect of the use of vehicles based in each Member State’s territory is covered by insurance. Only where a vehicle is unidentified or uninsured is the victim of a road accident to be thrown back on to a body of last resort; (in the UK this body is the Motor Insurers’ Bureau). Thus, in Fidelidade-Companhia de Seguros SA v Caisse Suisse de Compensation & Ors Case C-287/16 [2017] RTR 26, the European Court of Justice held that national laws that permitted motor insurers to deny a third party claim on the ground that the policyholder’s misrepresentation rendered it void were contrary to EU law. Fidelidade led to a concession by the government in Roadpeace v Secretary of State for Transport & Anor [2017] EWHC 2725 (Admin) that section 152(2) was no longer compatible with EU law.”

 

 

Note that the Supreme Court has given the insurer in the Cameron case permission to appeal to the Supreme Court.

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Written by kerryunderwood

May 14, 2018 at 8:34 am

Posted in Uncategorized

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