Richards v Secretary of State for Transport [2018] EWHC 2944 (QB)

[2018] EWHC 2944 (QB)Case No TLQ17/0913
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 02/11/2018
Before
MR JUSTICE FOSKETT
Between
ANNA RICHARDSClaimantSECRETARY OF STATE FOR TRANSPORTDefendant
Robert Weir QC (instructed by Irwin Mitchell LLP) for ClaimantJemima Stratford QC and Isabel Hitching (instructed by Government Legal Department) for DefendantHearing date 18 October 2018
Judgment Approved
[1]The trial of a preliminary issue in this case is floating in a 3-day window commencing on 10 December 2018 with a time estimate of 4-5 days. The current issue before the court is whether it should take place or be stayed to await the outcome of the appeal in the case of Lewis v Tindale and MIB and Secretary of State for Transport [2018] EWHC 2376 (QB), a decision of Soole J given in a judgment handed down on 14 September 2018. Soole J gave permission to appeal. The Defendant submits that the stay should be imposed. The Claimant disagrees.[2]The claim in the present case is a “Francovich claim” or a “claim for Francovich damages”. Such a claim involves the assertion that the national government of an EU country is liable to pay compensation to an individual who has suffered a loss by reason of the State's failure to transpose an EU Directive into national law. The claim in this case is one brought by the Claimant against the Defendant in respect of an accident on private land caused (on the Claimant’s case) by her mother’s negligent use of a vehicle. The vehicle was insured against third party risks, but not (on the Claimant’s case) if the insured was negligent. Since the accident occurred on private land, Part VI of the Road Traffic Act 1988 did not cover the circumstances of this accident. The Claimant was crushed by the rear ramp of a horse lorry causing her serious injuries.[3]The preliminary issue ordered by Master McCloud on 8 June 2017 is as follows:
“Whether the defendant’s admitted breach of duty is sufficiently serious to merit an award of damages.”
[4]The foregoing is the second of the three constituent elements of a Francovich claim which (following the CJEU decision in Brasserie du Pêcheur v Germany and R v SoST, ex p. Factortame (No. 4) Joined Cases C-46/93 and C-48/93 [1996] QB 404) are –(a) The EU rule of law in question was intended to confer rights on individuals.(b) That the breach of EU law is sufficiently serious to merit an award of damages; and(c) That the breach of EU law has directly caused loss to the claimant.[5]Of those three elements, (a) is admitted in this case. (b) and (c) are in issue.[6]The relevant Directive is Directive 2009/103/EC. Soole J described it in this way: “17. Directive 2009/103/EC consolidates a number of Motor Insurance Directives (MID) relating to compulsory insurance against civil liability in respect of the use of motor vehicles and which date back to Council Directive 72/166/EEC of 24 April 1972. By Article 8 thereof, the latter required Member States to ‘…bring into force the measures necessary to comply with this Directive…’ by no later than 31 December 1973. Unless otherwise stated, all references are to the Articles of the 2009 Directive. 18. Article 3 headed ‘Compulsory insurance of vehicles’ provides as material: ‘Each Member State shall, subject to Article 5, 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 the measures referred to in the first paragraph. … The insurance referred to in the first paragraph shall cover compulsorily both damage to property and personal injuries.’[7]It will be apparent that Article 3 does not on its face restrict the requirement of insurance to liability in respect of the use of a vehicle purely on a “road or other public place”.[8]In Lewis, the claimant brought a claim against the person responsible for the accident (D1), the Motor Insurers’ Bureau (‘MIB’) (D2) and the Secretary of State for Transport (D3). It was not in issue that D1 was responsible for the accident and was uninsured. The MIB denied contingent liability under the Uninsured Drivers Agreement 1999 (‘the UDA’) because the accident and injuries did not arise out of the use of the vehicle “on a road or other public place”, the limit of the statutory obligation to insure the use of a vehicle under section 145 of the Road Traffic Act 1988. The claim against D3 was a claim for Francovich damages (the allegation being that D3 had failed to implement the foregoing Directive) and was stayed pending resolution of the claim against the MIB.[9]It is to be noted that in R (RoadPeace) Ltd v. Secretary of State for Transport [2018] 1 WLR 1293, the Secretary of State and the MIB acknowledged that Article 3 of the 2009 Directive had direct effect between an individual and the State or its emanation, but disputed that the MIB was an emanation of the State. That latter issue did not fall for determination in that case.[10]In Lewis, one of the arguments advanced on the claimant’s behalf to support the case against the MIB was that, if the liability of the person responsible for the accident was not required to be insured by virtue of the 1988 Act, the MIB was obliged to satisfy any judgment against that person pursuant to the Directive and that the Directive had “a direct effect” against the MIB. It was recognised by the parties that each aspect of that argument depended upon whether the MIB was an “emanation of the State”. That issue was thus directly relevant in that case.[11]Hitherto the English authorities were to the effect that the MIB was not an emanation of the State: see Byrne v. MIB [2009] QB 66 (Flaux J, as he then was) and Mighell v. Reading [1999] Lloyds Rep IR 30, 42, per Hobhouse LJ, as he then was. That was the general understanding of the position in English law at the time the limitation period in relation to any claim that the Claimant had against the MIB expired in July 2014. However, two decisions of the Court of Justice of the European Union (‘CJEU’) reported in 2016 changed the landscape. In Vnuk v. Zavarovalnica Triglav dd (Case C-162/13) [2016] RTR 10, it was decided that Article 3 of the Directive must be interpreted as meaning that the concept of “use of vehicles” in that Article covered any use of a vehicle that is consistent with the “normal function of that vehicle” even if the use was on private land. In Roadpeace (see paragraph 9 above), Ouseley J commented at [45] that for “some Member States, this was a surprising outcome” and that “[the UK] and others have had to consider what the full effect of the judgment was, and how to meet it through legislation”. Then in Farrell v. Whitty (No.2) (Case C-413/15) [2018] 3 WLR 285, a decision of the CJEU given on 10 October 2017, it held that the Motor Insurers Bureau of Ireland (‘MIBI’) was an “emanation of the State” with the result that since the Directive was “sufficiently precise and unconditional” it could be relied on against the MIBI.[12]Soole J’s conclusion on the “emanation of State” can be seen at [126] and [130] of his judgment:
“I am satisfied that the MIB is for these purposes an emanation of the State. In my judgment the effect of the CJEU decision in Farrell No.2 is to supersede the reasoning in Byrne and the observations of Hobhouse LJ in Mighell.” “In circumstances where there are no material differences between the position of the MIBI and the MIB, I see no reason to reach a different conclusion in respect of the MIB ….”
[13]It followed in that case that the claim against the MIB succeeded. It is not clear from the judgment what will happen about the stayed claim against the Secretary of State if the appeal is unsuccessful: will it “fall away”, as Ms Jemima Stratford QC for the Defendant suggests, or will it (or could it) remain alive, as might be the effect, if correct, of the submissions of Mr Robert Weir QC for the Claimant in this action?[14]Ms Stratford submits that an equivalent position now arises in the present case. As things now stand, she submits that the Claimant has a claim against the MIB (or at least will have if the limitation period can be disapplied under section 33 of the Limitation Act 1980) and also contends that such a claim “is not an alternative to a claim against the [Defendant] leaving a claimant with a choice as to which to pursue [because the] claim against the MIB is logically and legally prior to a Francovich damages claim ….” She submits that “[if] the claim against the MIB succeeds there will be no claim against the [Defendant].” Her essential contention is that, whilst the decision in Lewis is treated as the law, the present claim is “academic” and should not be permitted to proceed because of the “considerable use of court time and public funds which the December preliminary issue trial will entail.” This was reflected in the Draft Re-Amended Defence which contains this averment:
“Yet further [the] MIB would have been obliged to meet and/or pay the sum found due under any judgment against Mrs Richards because Article 3 of the … Directive has direct effect against the MIB as an emanation of the state …. In the premises the Claimant has not suffered any loss and/or has not been caused any loss by the Defendant and the claim is liable to be struck out.”
[15]That is the substance of the argument in favour of a stay. Ms Stratford says that it constitutes a “knock-out blow” in relation to the resistance to the application for a stay and that the relevant authorities support the contention she has advanced.[16]Mr Weir counters that by submitting that Ms Stratford’s argument is wrong in law and that the Claimant’s right to a Francovich remedy cannot be excluded on the basis that the Article infringed may be relied upon directly before the national courts. He submits that the authorities to which he referred me establish beyond doubt that he is right. He too claims a “knock-out blow”.[17]The application before me is, therefore, in effect an application by the Defendant for an adjournment of a trial of an issue that is suggested to be (or that it may be) academic. The application itself was listed for 3 hours. Such an occasion is hardly one for a decision to be made on a matter of principle that may have implications going beyond those arising in this case and, accordingly, I decline any invitation to make such a decision. My decision will be based on rather more prosaic and pragmatic considerations. I will indicate below, in summary form, the competing contentions advanced in support of the two alleged “knock-out blows”, but all I am prepared to say at this stage is that each proposition is arguable. All I will say is that, had I been persuaded that the Defendant’s contention was undoubtedly correct, I could have seen the force of the argument for a stay. However, for the reasons given below, I do not think I can accept that the argument is so overwhelming as to have that effect. Accordingly, as it seems to me, the true issue is whether the uncertainty about the answer and, of course, the uncertainty surrounding the outcome of the appeal in Lewis, means that it would be appropriate to await the outcome of the appeal before proceeding with the preliminary issue trial in December. I will return to that below having summarised the competing contentions to which I have already alluded.[18]As already foreshadowed, Ms Stratford’s essential argument is that, on the basis of Lewis, the Claimant now has, or at least had, a potential claim against the MIB. It follows, she argues, that if the Claimant has lost her right to claim from the MIB, the right has not been lost as a result of D3’s breach of EU law, or that if she fails in her attempt to secure compensation from the MIB it will not have been caused by D3 and/or that she will not have not suffered any loss. Given the Secretary of State’s position referred to in paragraph 9 above, the first argument is hardly an attractive one, but if that is the effect in law then, of course, it must follow. She also says that a Francovich claim is a “backstop remedy of last resort” and has referred to the Opinion of AG Sharpston in Farrell v Whitty (No. 2) as supportive of that view. She sought to distinguish and explain the cases relied upon by Mr Weir.[19]For present purposes, I do not think I need go further than the first case to which Mr Weir drew my attention. This was Spencer v Secretary of State for Work and Pensions [2009] QB 358, where the Court of Appeal held that there was no precondition to the pursuit of a Francovich claim that all domestic remedies should have been exhausted. It was said that this was not the effect of Brasserie (see paragraph 4 above): see [38]-[39]. At this stage of considering the issue, this must inevitably be seen as a most persuasive authority and does appear to represent a clear statement of principle irrespective of the surrounding facts.[20]In relation to other factors to be considered in relation to the overall issue, Mr Weir suggested that AG Sharpston’s opinion on the precise issue in Farrell v Whitty (No. 2) was not expressly approved by the CJEU and also submits that it is open to a State to raise the issue of a failure to mitigate the relevant loss said to have arisen from the failure to incorporate a Directive, but no such plea has been raised in this case.[21]All this means that I cannot dismiss as entirely misconceived the notion that, even if Lewis is upheld, there is no basis upon which the Claimant’s Francovich claim can proceed. Obviously, if the appeal in Lewis is allowed and the previous understanding of the law is reinstated, then plainly such a claim could proceed. Naturally, I express no view on the outcome of the appeal save to note that Soole J himself felt that the issue was worthy of the attention of the Court of Appeal.[22]My informal inquiries of the Civil Appeals Office reveal preliminary indications are that the appeal in Lewis is unlikely to be heard until March/April 2019 with, one supposes, some while for a reserved judgment (or reserved judgments) to be given. If the issue is regarded as important, an appeal to the Supreme Court cannot be ruled out. Currently in the Queen’s Bench Division, cases of 4-5 days duration are being listed 12 months hence. If that remains the position, it means that, if there is a stay, the earliest that the issue due to be tried in December will be heard (on the assumption that Lewis ends in the Court of Appeal) would be during the Summer (more likely, the Autumn) Term 2020 and thus some two years hence.[23]The Claimant has suffered serious injuries, which inevitably have gone uncompensated thus far, and, looking at it from her point of view, there is an interest in moving her case one stage further in the meantime. I do not think that the delay can, as Ms Stratford suggested, be compensated by interest – the rate of interest is not generous at the moment. Obviously, if the preliminary issue is not determined in her favour, that would be the end of the Claimant’s Francovich claim in any event.[24]Postponing the resolution of that issue would mean some dislocation in the court’s timetable since time has been allocated to it and, given that the hearing is (at the time of drafting this judgment) only 6 weeks away, with all relevant witnesses doubtless warned and disclosure complete, there seems, on balance, no reason for the court to decide that the hearing should be postponed. To my mind, in the particular circumstances of this case, the decision about whether to proceed is essentially that of the Claimant’s team. If they felt that it was an exercise that, in the Claimant’s interests given potential costs considerations and risks, should not be undertaken at this stage, that would be a decision that the court could accept. However, if irrespective of those considerations, they felt that it was in the Claimant’s interests to proceed, then, as I have indicated, I do not consider that there are grounds upon which the court should intervene to prevent that occurring.[25]Accordingly, for those reasons, briefly expressed, I reject the Defendant’s application to impose a stay to await the outcome of the appeal in Lewis.