Motor Brief: latest decisions May 2019

A round-up of recent court decisions raising issues relating to, ‘exceptional circumstances’ and fixed costs, declarations to avoid a policy, ‘use’ of a vehicle, claims against unidentified drivers, and interim payments.

‘Exceptional circumstances’ test to avoid fixed costs is not a ‘low bar’

Ferri v Gill [17.04.2019]

This High Court decision provides confirmation that the ‘exceptional circumstances’ test under Part 45 of the Civil Procedure Rules (CPR) that must be satisfied in order to claim more than fixed costs in cases that exit the portal, is not a ‘low bar’.

The claimant, injured in a road traffic accident, initially had his claim progressed under the fast track portal, but subsequently instructed new solicitors who confirmed in writing that they would not be running it is as such, as the claimant had suffered a serious shoulder injury, had ongoing loss of earnings and required private treatment.

The claim settled without issue of proceedings in the sum of £42,000 and more than fixed costs were sought. At first instance Master McCloud (sitting as a Deputy Costs Judge) found that the test of exceptionality was a ‘low bar’ because the portal was intended to deal with simple cases “which would typically be fast track cases” and that this case was “on balance outside the general run of such cases”. The Master held that costs were subject to detailed assessment.

On appeal by the defendant, Mr Justice Stewart held otherwise, finding that the test was a high bar and required the court to consider whether a case was exceptional in the context of cases that had left the low value protocol and were subject to the regime in CPR 45 section IIIA. The case has been remitted back to the Senior Costs Office for reconsideration and for the correct test of exceptionality to be applied.

Contact: Sandip Sidhu

Related item: High Court clarifies test for ‘exceptional circumstances’ in fixed costs cases

High Court upholds declaration granted to insurer

Colley v Shuker, UK Insurance Ltd and Motor Insurers Bureau [28.03.2019]

The High Court in this case considered the issue of whether section 152 of the Road Traffic Act 1988 (the RTA) – circumstances where the insurer is entitled to avoid liability - could be construed consistently with the European Motor Directive to set aside a declaration in favour of insurers to avoid a policy.

The claimant who suffered serious injuries, was a passenger in a vehicle driven by the first defendant and had been aware before getting into the car, that the first defendant did not have a valid driving licence and was not insured to drive the vehicle. The insurance policy had been issued to the first defendant’s father and did not cover the first defendant. The insurer was granted a declaration to avoid the policy on the grounds of material misrepresentations by the first defendant’s father.

The claimant issued proceedings against the first defendant and insurers and sought to set aside the declaration in favour of the insurers, asserting a derivative claim against the insurer to satisfy any judgment obtained against the first defendant (as opposed to a direct claim against the insurer). Despite its apparent incompatibility with the Motor Insurance Directive, the court held that in those circumstances it had no obligation, or power, to disapply the clear provision of section 152 of the RTA.

Contact: Niall Edwards

Supreme Court provides useful clarity on the issues of the ‘use’ of a motor vehicle

R&S Pilling t/a Phoenix Engineering v UK Insurance Ltd [27.3.2019]

The Supreme Court has made a welcomed decision in confirming that a vehicle being repaired on private property is not being ‘used’. The court clarified that whilst the meaning of a motor policy, which does not purport to provide additional cover, makes it necessary to read words into it -  the extension of what is expressly provided is to that which the Road Traffic Act 1988 requires, but no more.

The decision provides useful clarity on the issues of the ‘use’ of a motor vehicle and this undoubtedly represents a logical decision. However, a word of caution must be sounded, that the decision is fact specific. Whilst it is relatively clear that the vehicle was immobile (on its side) and in the process of  being repaired, it was clearly not driven and therefore not being ‘used’ - but what if the fire had occurred when the vehicle was allowed to tick over while stationary post-repairs? It is not inconceivable that in those circumstances, the court could reach a different conclusion.

Contact: Ian Davies

Related item: Supreme Court provides useful clarity on the issues of the ‘use’ of a motor vehicle

Good news as it is confirmed claims cannot be made against an unidentified driver

Cameron v Liverpool Victoria Insurance Co Ltd [20.02.19]

The Supreme Court’s long-awaited judgment constitutes a triumph for insurers, as it now appears difficult for a claimant to sue an unidentified defendant following a ‘hit and run’ road traffic accident. In this case, once it was established that the claimant could identify the car but not the driver, the claimant applied to have her case amended by substituting the first defendant to ‘the person unknown driving the vehicle’.

The district judge dismissed her application and granted summary judgment in favour of the insurer, but the Court of Appeal reversed that decision. The Supreme Court however, reverted to the original decision. In reaching their conclusion, the court confirmed that the description did not identify anyone. As such, service on the driver would be impossible, breaching the fundamental principle that a person could not be made subject to the court’s jurisdiction without having notice of the proceedings. The court further noted that the MIB untraced drivers scheme was the correct recourse for such a case.

Contact: Mark Walsh

Related item: Absolute certainty or more challenges to come?

Risk of overpayment leads to refusal of application for interim payment

Farrington v Menzies-Haines [07.03.2019]

In this personal injury claim following a road traffic accident, the defendant admitted primary liability but contended there was contributory negligence and disputed that the claimant’s psychological problems had been caused by the accident. The court refused an interim payment on the basis that the gap between the amount claimed and what the defendant was conceding was too significant, creating a risk of overpayment.

It was held that where there are genuine and substantive challenges to causation, the court could not award an interim payment on the assumption that the issues on causation would be decided in favour of the claimant. To do so, would result in interim payment applications becoming mini-trials of causation, necessitating courts to hear evidence to decide such issues.

Contact: Niall Edwards

Read other items in Motor Brief - May 2019