“a claimant who, at the time of the use giving rise to the relevant liability was voluntarily allowing himself to be carried in the vehicle and, either before the commencement of his journey in the vehicle or after such commencement if he could reasonably be expected to have alighted from it, knew or ought to have known that – … (iii) the vehicle was being used in the course or furtherance of a crime.”
“Each Member State shall … take all appropriate measures to ensure that civil liability in respect of the use of vehicles normally based in its territory is covered by insurance. The extent of the liability covered and the terms and conditions of the cover shall be determined on the basis of these measures.”
“Whereas, however, major disparities continue to exist between the laws of the different Member States concerning the extent of this obligation of insurance cover; whereas these disparities have a direct effect upon the establishment and operation of the common market; Whereas, in particular, the extension of the obligation of insurance cover to include liability incurred in respect of damage to property is justified; … Whereas it is necessary to make provision for a body to guarantee that the victim will not remain without compensation where the vehicle which caused the accident is uninsured or unidentified; whereas it is important … to provide that the victim of such an accident should be able to apply directly to that body as a first point of contact; whereas, however, Member States should be given the possibility of applying certain limited exclusions as regards the payment of compensation by that body and of providing that compensation for damage to property caused by an unidentified vehicle may be limited or excluded in the view of the danger of fraud; Whereas it is in the interest of victims that the effects of certain exclusion clauses shall be limited to the relationship between the insurer and the person responsible for the accident; whereas, however, in the case of vehicles stolen or obtained by violence, Member States may specify that compensation will be payable by the aforementioned body; Whereas in order to alleviate the financial burden on that body, Member States may make provision for the application of certain excesses where the body provides compensation for damage to property caused by uninsured vehicles or, where appropriate, vehicles stolen or obtained by violence ….”
“Article 1 1. The insurance referred to in Article 3(1) of [the First Directive] shall cover compulsorily both damage to property and personal injuries. … 4. Each Member State shall set up or authorize a body with the task of providing compensation, at least up to the limits of the insurance obligation for damage to property or personal injuries caused by an unidentified vehicle or a vehicle for which the insurance obligation provided for in paragraph 1 has not been satisfied. … The victim may in any case apply directly to the body which, on the basis of information provided at its request by the victim, shall be obliged to give him a reasoned reply regarding the payment of any compensation. However, Member States may exclude the payment of compensation by that body in respect of persons who voluntarily entered the vehicle which caused the damage or injury when the body can prove that they knew it was uninsured. Member States may limit or exclude the payment of compensation by that body in the event of damage to property by an unidentified vehicle. They may also authorize, in the case of damage to property caused by an insured vehicle an excess of not more than 500 ECU for which the victim may be responsible. Furthermore, each Member State shall apply its laws, regulations and administrative provisions to the payment of compensation by this body, without prejudice to any other practice which is more favourable to the victim.”
“Each Member State shall take the necessary measures to ensure that any statutory provision or any contractual clause contained in an insurance policy issued in accordance with Article 3(1) of [the First Directive], which excludes from insurance the use or driving of vehicles by: - persons who do not have express or implied authorisation thereto, or - persons who do not hold a licence permitting them to drive the vehicle concerned, or - persons who are in breach of the statutory technical requirements concerning the condition and safety of the vehicle concerned, shall, for the purposes of Article 3(1) of [the First Directive], be deemed to be void in respect of claims by third parties who have been victims of an accident. However the provision or clause referred to in the first indent may be invoked against persons who voluntarily entered the vehicle which caused the damage or injury, when the insurer can prove that they knew the vehicle was stolen.”
“Without prejudice to the second subparagraph of Article 2(1) of [the Second Directive], the insurance referred to in Article 3(1) of [the First Directive] shall cover liability for personal injuries to all passengers, other than the driver, arising out of the use of a vehicle.”
“13. The preambles to the directives show that their aim is firstly to ensure the free movement of vehicles normally based on Community territory and of persons travelling in those vehicles, and secondly of guaranteeing that the victims of accidents caused by those vehicles receive comparable treatment irrespective of where in the Community the accident has occurred. 14. For that purpose the First Directive … established a system based on the presumption that vehicles normally based on Community territory are covered by insurance. Article 3(1|) of the First Directive thus provides …. 15. The original version of that article left it to the Member States, however, to determine the damage covered and the terms and conditions of compulsory insurance. 16. In order to reduce the disparities which continued to exist between the laws of the Member States with respect to the extent of the obligation of insurance cover … Article 1 of the Second Directive required compulsory cover, as regards civil liability, for both damage to property and personal injuries, up to specified sums. Article 1 of the Third Directive extended that obligation to cover for personal injuries to passengers other than the driver. 17. Article 1(4) of the Second Directive also improved the protection of victims by requiring the Member States to set up or authorise bodies responsible for providing compensation for damage to property or personal injuries caused by unidentified or uninsured vehicles. 18. In view of the aim of ensuring protection, stated repeatedly in the directives, Article 3(1) of the First Directive, as developed and supplemented by the Second and Third Directives, must be interpreted as meaning that compulsory motor insurance must enable third-party victims of accidents caused by vehicles to be compensated for all the damage to property and injuries sustained by them, up to the amounts fixed in Article 1(2) of the Second Directive. 19. Any other interpretation would have the effect of allowing Member States to limit payment of compensation to third-party victims of a road-traffic accident to certain types of damage, thus bringing about disparities in the treatment of victims depending on where the accident occurred, which is precisely what the directives are intended to avoid. Article 3(1) of the First Directive would then be deprived of its effectiveness. 20. That being so, Article 3(1) of the First Directive precludes an insurer from being able to rely on statutory provisions or contractual clauses to refuse to compensate third-party victims of an accident caused by the insured vehicle.”
“24. Consequently, the directives create the legal framework for ensuring that persons injured by a motor vehicle, wherever registered in the Community, can be certain of compensation. The guarantee of compensation for damage caused by vehicles normally based in another Member State, which the national insurers’ bureau of the host country must assume, and the creation of a body which must provide compensation for damage to property or personal injuries caused by an unidentified or uninsured vehicle [footnote reference to Article 1(4) of the Second Directive] are both part of that context.”
“18. In view of the aim of protecting victims, the Court has held that Art.3(1) of the First Directive precludes an insurer from relying on statutory provisions or contractual clauses in order to refuse to compensate third-party victims of an accident caused by the insured vehicle. 19. The court has also held that the first subparagraph of Art.2(1) of the Second Directive simply repeats that obligation with respect to provisions or clauses in a policy excluding from insurance the use or driving of vehicles in particular cases …. 20. By way of derogation from that obligation, the second subparagraph of Art.2(1) provides that certain persons may be excluded from compensation by the insurer, having regard to the situation they have themselves brought about (persons entering a vehicle which they know to have been stolen). 21. However, as it is a provision which establishes a derogation from a general rule, the second subparagraph of Art.2(1) of the Second Directive must be interpreted strictly. 22. As the Advocate General rightly stated, at point 42 of his Opinion, any other interpretation would allow Member States to limit payment of compensation to third-party victims of road accident to certain circumstances, which is precisely what the directives are intended to avoid. 23. It follows that the second subparagraph of Art.2(1) of the Second Directive must be interpreted as meaning that a statutory provision or a contractual clause in an insurance policy which excludes the use or driving of vehicles from the insurance may be relied on against third parties who are victims of a road accident only where the insurer can prove that the persons who voluntarily entered the vehicle which caused the injury knew that it was stolen.”
“27. The Member States must exercise their powers in compliance with Community law and, in particular, with Art.3(1) of the First Directive, Art.2(1) of the Second Directive and Art.1 of the Third Directive, whose aim is to ensure that compulsory motor vehicle insurance allows all passengers who are victims of an accident caused by a motor vehicle to be compensated for the injury or loss they have suffered.”
“42. … This exception must be interpreted narrowly and as being exhaustive since it forms a departure from the general rule. Any other interpretation would have the effect of allowing Member States to limit payment of compensation to third-party victims of a road accident to certain types of damage, thus bringing about the disparities in the treatment of victims depending on where the accident occurred, which is precisely what the directives are intended to avoid.”
“27. In addition, Community legislation expressly lays down exceptions to the obligation to protect victims of accidents. Those exceptions are referred to in the third sub-paragraph of Art.1(4) and in Art. 2(1) of the Second Directive. 28. However, the Community legislature did not provide any derogation with respect to a separate category of persons who may be victims of a road traffic accident, namely those who were on board a part of the vehicle which is not designed for their carriage and equipped for that purpose. That being so, those persons cannot be excluded from the concept of ‘passenger’ and, accordingly, from the insurance cover which the Community legislation guarantees. 29. Given that, first, the right to derogate from the obligation to protect accident victims is defined and circumscribed by Community law and, secondly, the realisation of the objectives referred to above requires a uniform approach to the insurance cover in respect of passengers at Community level, the Member States are not entitled to introduce additional restrictions to the level of compulsory insurance cover to be accorded to passengers.”
“29. The importance attached by the EU legislature to the protection of victims moved it to supplement those arrangements by requiring Member States, under art.1(4) of the Second Directive, to establish a body with the task of providing compensation, at least up to the limits laid down by EU law, for damage to property or personal injuries caused by an unidentified vehicle or a vehicle for which the insurance obligation under art.1(1) of the Second Directive, which refers to art.3(1) of the First Directive, has not been satisfied. In order to alleviate the financial burden to be borne by that body, Member States were free to exclude the payment of compensation by it in certain cases or to provide for excesses. 30. The payment of compensation by such a body was therefore considered to be a measure of last resort, envisaged only for cases in which the vehicle that caused the injury or damage is uninsured or unidentified or has not satisfied the insurance requirements referred to in art.3(1) of the First Directive …. 33. As regards the determination of the actual circumstances in which the insurance obligation laid down in art.3(1) of the First Directive may be regarded as not having been satisfied, it is significant – as the Advocate General stated in point 32 of his Opinion – that the EU legislature did not confine itself to providing that the body must pay compensation in the event of damage caused by a vehicle for which the insurance obligation had not been satisfied in general, but made it clear that that was to be the case only in relation to damage caused by a vehicle for which the insurance obligation provided for in art.3(1) of the First Directive has not been satisfied, that is to say, a vehicle in respect of which no insurance policy exists …. 34. It follows from the foregoing that … 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.”
“28. … The payment of compensation by that body was not intended to be automatic – being confined to two sets of circumstances – and the legislature had to some extent sought to limit the financial burden likely to be represented by the payment of compensation by that body, leaving it open to the Member States to implement more favourable measures relating specifically to the conditions governing the payment of compensation by that body. 29. Consequently, if it can be inferred from art.1 of [the Second Directive] that the appropriate measures referred to in art.3 of [the First Directive] include the setting up of a body ‘with the task of providing compensation … for damage to property or personal injuries’, it follows that the payment of compensation by that body was expressly limited to damage ‘caused by an unidentified vehicle or a vehicle for which the insurance obligation provided for in paragraph 1 has not been satisfied’, without prejudice to the right of the Member States ‘to regard compensation by that body as subsidiary or non-subsidiary.”
“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 insurance against civil liability in respect of the use of motor vehicles as progressively harmonised at EU level and, on the other hand, the rules under which civil liability insurance is guaranteed, which, to mind, have largely yet to be developed. 35. In those circumstances, I find it difficult to agree with an interpretation of art.3 of [the First Directive] along the lines argued for by the applicants in the main proceedings. 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 insurance …. … 44. Lastly, I should also like to emphasise the important difference that exists, in my view, between a vehicle in respect of which the insurance obligation as described in art.3 of [the First Directive] has not been satisfied and a vehicle insured with an insolvent insurer. After all, a vehicle for which the insurance obligation has not been satisfied is an uninsured vehicle. A vehicle which was insured with an insolvent insurer has satisfied the obligation to secure insurance against civil liability in respect of the use of vehicles. The risk cover is genuine but the compensation is delayed by the financial situation of the insurer.”
“Candolin is instructive in at least two ways. In my view, this was the first occasion on which the ECJ made crystal clear that exclusion clauses relating to the conduct of the victim, as opposed to that of the insured, could not be relied on beyond the extent expressly mandated by the Directive. To my mind, the Advocate General had said almost as much in RuizBernaldez, although there the conduct of the victim was simply not in issue. I have also examined what the ECJ said at paragraphs 20 and 21 of its Judgment in that case. Putting public policy considerations to one side, I would add that it is not possible to discern any reason based on logic or principle for treating exclusion clauses relating to the conduct of the victim differently from those relating to the conduct of the insured: if the Directives are to be interpreted as imposing strict constraints in relation to the latter, that must apply equally to the former. Secondly, although the Defendant may be entitled to point out that Candolin does not bear on Article 1.4 of the Second Council Directive, the reason for that must be plain and obvious: no issue under that provision arises if the insurer is unable to avoid liability. However, if, by dint of some vagary of domestic law, an insurer is entitled to avoid liability and Article 1.4 comes into play, the logic of Candolin must surely be that the ability of the national body to avoid paying the victim is constrained to exactly the same extent.”
“What we also see in Farrell is the taking of the final short step – the express application of the comprehensive code principle to Article 1.4 cases – left untaken in Candolin.”
“An Article 1.4 compliant regime does not have to guarantee the satisfaction of the insurance obligation in some general way: the national body is not a long-stop to meet the obligations of insolvent insurers. The guarantee which Article 1.4 mandates is limited to cases where there is no insurance policy in existence at all. In my judgment, Csonka has no relevance to the situation where an insurer seeks to avoid liability to the victim, either on the basis of misrepresentation or non-disclosure by the insured, or on the basis of some misconduct by the victim which is not expressly catered for in the exceptions to the Directive ….”
“64. My review of the ECJ jurisprudence has already provided a clear and conclusive answer to this: see Ruiz Bernaldez, Candolin and Farrell. 65. Undaunted, Mr Kennelly urged me to adopt a different approach, having regard to the terminology of the subordinate clause to the sixth recital to the Second Directive. Mr Kennelly invited me to note the plural (‘certain limited exclusions’) and to carry out some basic arithmetic. The sole exclusion expressly mentioned in Article 1.4 which is not referred to in some other recital is the knowledge of no insurance exception in the second subparagraph. Specifically, property damage is dealt with in the second part of the subordinate clause to the sixth recital, stolen vehicles in the seventh recital, and excesses in the eighth recital. It follows that the subordinate clause to the sixth recital must be contemplating further limited exclusions. These are permissible provided that they are strictly defined. 66. I simply cannot accept that submission. The recitals do not bear this overly punctilious textual approach, nor can they be permitted to override the express provisions of the Directive, which must be pre-eminent. Furthermore, I accept the force of Mr Moser’s submission that, if the Defendant were right, we could in fact have an unlimited number of exceptions each of which was tightly worded. But Mr Kennelly’s greatest problem is that ECJ case law is against him.”
“70. The condition requiring a sufficiently serious breach of Community law implies manifest and grave disregard by the Member State for the limits set on its discretion, the factors to be taken into consideration in this connection being, inter alia, the degree of clarity and precision of the rule infringed and the measure of discretion left by that rule to the national authorities …. 71. If, however, the Member State was not called upon to make any legislative choices and had only considerably reduced, or even no, discretion, the mere infringement of Community law may be sufficient to establish the existence of a sufficiently serious breach …. 72. The discretion enjoyed by the Member State thus constitutes an important criterion in determining whether there has been a sufficiently serious breach of Community law. 73. That discretion is broadly dependent on the degree of clarity and precision of the rule infringed.”
“43. In the present case, article 8(1) is imprecisely worded and was reasonably capable of bearing, as well as the construction applied to it by the court in this judgment, the interpretation given to it by the United Kingdom in good faith and on the basis of arguments which are not entirely devoid of substance …. That interpretation, which was also shared by other member states, was not manifestly contrary to the wording of the Directive or to the objective pursued by it”
“20. … I have come to the conclusion that, notwithstanding the points in Mr Negassi’s favour (the most striking of which was the total exclusion of the subset of applicants for asylum of which he was one), the breach was not of sufficient seriousness to satisfy the test. It was not deliberate. It was the result of a misunderstanding of new provisions in an area of recent EU concern. It was not a cynical or egregious misunderstanding. It was not confined to the Secretary of State. It was shared, as a matter of first impression, by a number of judges. Whilst now all is clear, I do not think that it can be said to have been self-evidently so before the conclusion of [the case in the Supreme Court] ….”
“117. I therefore conclude that the Defendant is guilty of a serious breach of Community law in circumstances where its room for manoeuvre under the Directives was closely circumscribed. It did not have a wide discretion. Its obligations under the Directives, and their relevant confines, were quite clear, and – in the absence of knowing the actual reason for this policy decision – the best that may be said is that the Defendant decided to run the risk, which was significant, knowing of its existence. I have examined all of Lord Clyde’s factors: the majority bear on the seriousness, and some are of little weight in these circumstances. I conclude with little hesitation that the Defendant’s breach is so serious that, subject to the final issue of causation, it must pay compensation to the Claimant under the Francovich principle.”
“It seems to me that the judge, having directed herself correctly as to the multifactorial test, applied that test in a manner that is not open to material criticism …. I am therefore satisfied that there is no basis for interfering with the judge’s conclusion that the breach she had found did not amount to a manifest and grave disregard of the United Kingdom’s obligations under the directive.”