No 3BM90173
IN THE BIRMINGHAM COUNTY COURT

Civil Justice Centre
Bull Street
Birmingham

19th September 2014

Before:

HIS HONOUR JUDGE SIMON BROWN QC

- - - - - - - - - - - - - -

B e t w e e n:

JADE KIERA WIGLEY-FOSTER 
Claimant

- v -

NATASHA WILSON AND THE MIB
Defendants
- - - - - - - - - - - - - -

Transcribed by Cater Walsh Reporting Limited
(Official Court Reporters and Audio Transcribers)
1st Floor  Paddington House New Road   Kidderminster  DY10 1AL
Tel. 01562 60921:  Fax 01562 743235:  info@caterwalsh.co.uk 
- - - - - - - - - - - - - -

MR CHAPMAN appeared on behalf of the Claimant

MS KINSLER appeared on behalf of the Defendants
- - - - - - - - - - - - - -
JUDGMENT
Ex Tempore JUDGMENT
Friday 19th September 2014

JADE KIERA WIGLEY-FOSTER – v – NATASHA WILSON AND THE MIB

JUDGMENT

1.	JUDGE SIMON BROWN:  This is a claim for personal injuries by an English domicile relating to road traffic accident in Greece as long ago as 29th/30th August in 2008.  The relevant insurers, Commercial Value Insurance SA, are Greek but now insolvent. Therefore, prima facie, the Greek Auxiliary Fund is liable to compensate under Greek Law.

2.	However, the claimant brought a claim on 21st June 2013 against Natasha Wilson and also against the Motor Insurers Bureau on the grounds founded upon regulations 11, 12 and/or 13 of the Motor Vehicles Compulsory Insurance Regulations 2003.  In it, she claims there has been default or a failure on the part of the insurers or their representatives to respond to claims or to provide any reasoned response to it and therefore the Defendants are liable to her for breach of regulations.  

3.	The defendants, by their defence of 4th October 2013, denied liability. One of the key elements was that they denied they were liable under these regulations because it did not cover the situation here where the default was the insolvency of the Greek insurance company, where there was a scheme in Greece for that to be covered and the MIB was not liable under the regulations to compensate on the grounds of insolvency.

4.	The matter proceeded in this court before District Judge Griffiths who, upon hearing both counsel for the parties, allocated the matter to the multi-track but ordered that the following issue be tried as a preliminary issue: whether the MIB is liable to compensate the claimant under the Motor Vehicles Compulsory Insurance Regulations 2003.  

5.	The claimant, in essence, makes the beguilingly simple submission that the regulations are the precedent to liability and that there has been a default so that the regulations 11, 12 and/or 13 have come into play and, therefore, the answer to the question is yes.  The defendants submit that that is too facile a view of it and that construction of the regulations is not as would be appropriate in, say, contractual situations as it used to be in Prenn v Simmons where you look just merely at the words themselves.  You have to look at the regulations in their context and this is a European context in which they are borne out of a directive; the Fourth Directive being the most relevant one here.  On this particular point the defendant points to jurisprudence about this particular issue of interpretation which is extremely helpful; the court needs to consider the literal, historical, contextual and teleological interpretation as the interpretive exercise. Lord Mance is quoted upon this in the very helpful skeleton argument that has been provided by Ms Kinsler.  In the Bloomsbury International Ltd v Sea Fish Industry authority case in the Supreme Court he said: 

“In matters of statutory construction the statutory purpose 
and the general scheme by which it is to be put into effect 
are of central importance.  In this area, as in the area of
contractual construction, the notion of words having a 
natural meaning is not always very helpful,” 

and he quotes Lord Hoffmann in the Charter Reinsurance v Fagan case back in 1997: 

	“And certainly not as a starting point before identifying 
	the legislative purpose and scheme.”  

6.	Therefore, this is not such a simple preliminary issue exercise as perhaps envisaged by the District Judge. However, I have been most expertly taken through the legal material by both learned counsel in this case. They have helpfully guided me at very short notice through quite a minefield of Regulations, Directives, Travaux Preparatoires, Recitals, English and European case law against a factual background of Greek insolvency. Accordingly, doing the best that I can to see the way through this mass of jurisprudential material and in order to determine the preliminary issue in accordance with the overriding objective, I come to a clear conclusion in relative short form on this preliminary issue on an extempore basis.  

7.	We need to start with the regulations themselves. It is apparent from the face of the statutory instrument that they have been brought into being because of the Fourth Directive which says in the explanatory note, “These regulations give effect to Articles 5, 6 and 7 of the Fourth Motor Insurance Directive.”  There are a number of important parts but a key one is number 10, where the MIB is approved as the compensation body for the United Kingdom for the purposes of the Fourth Motor Insurance Directive and then there are 11, 12 and 13. 11 is the entitlement to compensation where the insurer is identified and there are various clauses or parts which have to be ticked off and it says that the injured party may make a claim for compensation if he has not commenced legal proceedings against the insurer of the vehicle, the use of which has caused the accident either of the conditions set out in paragraph 3 is fulfilled.  That is a permissive matter of making a claim.  The conditions here are that the injured party has claimed compensation with the insurer of the vehicle or the insurer’s claims representative and neither the insurer nor the claims representative has provided a ‘reasoned reply’ to the claim within the period of three months after the date it was made.  Here it is the claimant’s contention that there has been a default as far as that is concerned.  Then B, that the insurer has failed to appoint a claims representative in the United Kingdom and the injured party has not claimed compensation directly from that insurer.

8.	So, it appears from the face of the words themselves, before we move to the context of it, that it is effectively a procedural default that this is being contemplated rather than inability or insolvency.  There is certainly no reference to insolvency here in the statutory instrument.  At 12 it then deals again with procedure i.e. the mechanism of what should happen and the consequences of it.  In other words, it is very much a prescriptive procedural guide. which is prescriptive.  Paragraph 13 then deals with the situation which is even worse as far as tracing is concerned; where vehicle or insurer is not identified.  Although paragraph 13 has been pleaded in this case, it has not been pressed by the claimant during the course of argument and indeed it is difficult to see how it could be pressed on the facts of the vehicle and insurer actually being identified, although it has not been formally abandoned.  It is helpful though, because looking at the matter in the whole overall context, we are dealing here with the difficulties that someone in England has in pursuing a claim where the insurers abroad do not respond or cannot be identified.  It is quite a different situation from where the identified insurer is insolvent.  If these regulations were to cover insolvency one would have expected that to have been expressly stated; it has not. In my judgment, that is very strong guide support of the Defendant’s that the answer to the preliminary issue question is no.

9.	There is some further guidance which has been drawn to my attention about the situation of insolvency as far as insurance is concerned. There are three cases drawn to my attention that are helpful, They have been argued upon in some considerable depth.  The first one, which is the opinion of the Advocate General, and the judgment in the Tsonka case observations which are very powerful indeed.  In the judgment the questions of objectives and insolvency are dealt with. I read out these two paragraphs which I think are helpful in looking at the context that the Directives and the regulations should be looked at.  In paragraph 22 it says: 

“The national court asked in essence whether Article 3 
of the First Directive is to be interpreted as including 
among the obligations which it imposes on Member 
States that of establishing a body to ensure that 
compensation is provided to victims of road accident
situations where, although the person responsible for 
the damage had taken out insurance covering their civil
liability in respect of the use of vehicles, the insurer has 
become insolvent,” 

viz, the insolvency situation as here.  

“According to the court settled case law in interpreting 
a provision in European law it is necessary to consider
not only its wording but the context in which that 
provision arises and the objectives pursued by the rules 
of what it is part.”  

Here, I add that the objectives of the Fourth Directive appears to be dealing with are systemic procedural defaults.  

10.	In paragraph 30 there is a further helpful reference: 

“The payment of compensation by such a party was 
therefore considered to be a measure of last resort 
envisaged only for cases in which the vehicle that caused
the damage is uninsured or unidentified or has not 
satisfied the insurance requirements referred to in Article 3
 of the First Directive.”  Emphasis added.

In paragraph 31, again picking out some of the key passages, this is said:

 “A restriction is explained by the fact that Article 3(1) 
of the Directive, as has been pointed out in paragraph 
28 above, requires each Member State, subject to the 
derogations allowed under Article 4 of that Directive 
to ensure that every owner or keeper of a vehicle normally
based in its territory takes out a policy with an 
insurance company for the purpose of covering up to 
the limits established by European law his civil liability 
arising as a result of that vehicle.  Viewed in that light, 
the very fact that the damage has been caused by an 
uninsured vehicle attests to a breakdown in the system 
which the Member State was required to establish and 
justifies the payment of compensation by the national 
body providing compensation.  It follows from the 
foregoing, contrary to the line of argument put forward 
by the applicants in the main proceedings, the payment 
of compensation by such a national body as provided for
under the First and Second Directives cannot be regarded 
as the implementation of a guarantee scheme in respect 
of insurance against civil liability relating to the use of
motor vehicles; rather, it is intended to take effect only
in specific, clearly identified sets of circumstances.”  Emphasis added.

Paragraph 33 goes on: 

“The insolvency of an insurer does not constitute a case 
which can be identified as one of those sets of circumstances.  
In such a case the insurance obligation has been satisfied.” Emphasis added. 

In this case the vehicle was insured but the insurer subsequently went into insolvency so it is a situation which is quite clearly envisaged under these  particular paragraphs of this judgment.  

11.	The opinion of the Advocate General is also instructive where he says in his paragraph 31: 

“The measure adopted in 1983 clearly shows that the 
legislature did not see Article 3 as a general clause 
requiring Member States to set up a guarantee mechanism.”  

It goes on in paragraph 34: 

“The situation in which the person responsible for the 
damage did take out an insurance policy but with an 
insolvent insurer is quite different.  Essentially the case 
before the referring court highlights the fundamental 
difference between, on the one hand, the general rules 
governing motor insurance against civil liability in respect 
of the use of vehicles as progressively harmonised at 
European Union level and, on the other hand, the rules 
under which civil liability is guaranteed which, to my 
mind, have largely yet to be developed.”  

He goes on to say: 

“I find it difficult to agree with an interpretation of Article 
3 along the lines argued for by the applicants in the 
main provisions.  That provision requires the Member 
States to take all appropriate measures to ensure that 
civil liability is covered by insurance not to take all 
appropriate measures to guarantee the civil liability 
covered by the insurance.”

12.	In the instant case, there has been coverage by an insurance firm, there is a scheme in Greece whereby the insolvency of that insurer will be guaranteed but it does not go so far, and indeed, there is no regulation or Directive that obliges the MIB to sign up (and indeed they have not) to any guarantee in those circumstances.  In my judgment, the dicta cited from the above European case is case is the second strongly supportive indication that that the defendants are correct in their submissions.

13.	A second case is also instructive. Recently the case of Delaney came before the High Court and although not dealing with quite the same issues as before me, Jay J makes it clear that there is an important distinction between the situation of insolvency and procedural default under the relevant regulations.

14.	However, to my mind, the most helpful and authoritative case law exposition, is the exemplary exposition by Moore-Bick LJ who lucidly explains this difficult area of the law, and the interface of European law via directives where the directives are being ‘copied in’ by way of regulations or statutory instruments into our regulatory law.  In paragraph 21 of Jacobs v Motor Insurer’s Bureau, he says this:  

“The scheme of the compensation arrangements 
established by the Fourth Directive appears clearly from
Articles 6 and 7,” 

and I add here to which I will have to look at, 

“in essence the compensation bodies are intended to
provide a safety net which will be called upon only in
rare cases where the tort feasor is unidentified or 
uninsured or where for some reason the insurer fails to
respond to a claim within the prescriptive time.”  

He is there referring to the very Articles 11, 12 and 13, that are being relied upon here by the claimant and in that sentence quite clearly says that they are going to be rare cases and they are particular cases where the tort feasor is unidentified or uninsured or where for some reason the insurer fails to respond and those are Articles 11 and 12. 

 “Even then, however, the compensation bodies do not 
ultimately bear the burden of the claim because the body 
that has paid the compensation to an injured party has the
right to obtain reimbursement from the corresponding body 
in the state where the insurer is established.”  

15.	So in those circumstances the MIB would stand in place to pay but they would get reimbursement from the Greek body who would then have rights against the insurer under the rules of subrogation but that is a situation which only appertains in the situation which is envisaged by the Fourth Directive and the mirroring regulations.  It does not put the MIB in the frame to add another body where they have to recover from the Greek body, their counterparts in Greece.

“Or has a claim against one of the guarantee funds.  The 
scheme appears to proceed on the assumption that the 
existence of the driver’s liability and the determination 
of the amount of compensation payable to the injured 
party will be governed by the same principles at all stages
of the process but the Fourth Directive does not go so far
as to provide ... such questions are to be determined by 
reference to the law of the country in which the 
accident occurred.”  

16.	In paragraph 23 he deals with submissions which are made by the parties.  

“Mr Layton submitted that the right of an injured person 
to make a claim against the compensation body derives 
from the 2003 regulations themselves.  That, in my view, 
is correct.  The Fourth Directive obliges Member States to
put in place legislation to achieve the effects for which 
it provides.  In the absence of the 2003 regulations there 
would be no compensation body and no right for an 
insured person to recover compensation from it.  It is 
for Member States how to achieve that end and they 
are entitled as they wish to put in place legislation 
which goes beyond the minimum requirements, 
providing its effect does not conflict with the object
of the Fourth Directive.  When interpreting the 2003 
regulations, however, it must be borne in mind that 
the scheme established by the Fourth Directive provides
that liabilities imposed on the compensation body in the 
state where the injured person resides will be passed 
back, usually to the driver’s insurer by way of the 
compensation body in the State where the insurer is 
established.  In the case of an uninsured driver or 
unidentified vehicle to the relevant guaranteed fund.  
The guaranteed fund might have recourse against 
the driver himself under local law.  The central 
concept behind the scheme, therefore, is to provide 
the claimant with easy access to a defendant in his 
own country while ensuring that the liability ultimately 
comes to rests with the person or body with whom it 
ought to reside.” Emphasis added.

17.	Here, Moore Bick LJ makes it perfectly plain that this is a procedural facility rather than one which seeks to add some substantive claim where a guarantee fund or body funds somebody else’s insolvency and the insolvency of a Greek insurer.  No document has been produced before me where the MIB has agreed to fund or guarantee insolvent insurers whether here or abroad.  In my judgment, this is very powerful case law that indicate strongly that the submissions made by the defendants are correct.

18.	Finally, the relevant Articles which Moore Bick LJ referred; Article 6 which refers to compensation bodies.  It is a detailed document and it refers to each Member State shall establish or approve a compensation body and it then provides the mechanism where people may present claims.  It then describes in subsection 2 the compensation which has compensated the injured party in his Member State of residence shall be entitled to reclaim reimbursement of the sum by way of compensation from the compensation body in the Member State of the insurance undertakings establishment which has issued the policy.  So there is a mechanism here for recovering in the event of Articles 11, 12 or 13.  It then goes on: 

“The latter body shall then be subrogated to the injured 
party in his rights against the person who caused the
accident or his insurance undertaking insofar as 
the compensation body in the Member State of 
residence of the injured party has caused compensation 
for the loss or injuries suffered.”  

19.	So it is dealing with mechanisms and defaults across Europe where, needless to say, different practices occur.  There is nothing in any of these regulations that have been drawn to my attention nor in the case law which indicates that the MIB have been put in the position of guaranteeing against insolvency.  Again, in my judgment this very strong support of the defendants’ submissions.  

20.	In my judgment, after due consideration of all the detailed submissions made before me, the clear answer to this preliminary issue/question is “No.”