| OUTER HOUSE, COURT OF SESSION [2007] CSOH 149 |
| PD1181/03 | OPINION OF LORD KINCLAVEN in the cause ANNE LOUISE TIFFNEY (A.P.) Pursuer; against (FIRST) SEAN FLYNN (A.P.) and (SECOND) MOTOR INSURERS BUREAU Defenders: ________________ |
Pursuer: Ellis QC, Primrose; Balfour + Manson. LLP
First Defender: Forsyth; Campbell Smith for Condies, Solicitors, Perth
Second Defenders: Ferguson QC, Dunlop; Dundas & Wilson, C.S. LLP
21 August 2007
Introduction
[1] This is a reparation action arising out of a fatal road traffic accident which occurred in Mid Calder, West Lothian on 14 January 2001.
[2] The issue concerns the proper construction of the Agreement between the MIB and the Secretary of State for the Environment, Transport and the Regions dated 13 August, 1999 which is sometimes referred to as the "Compensation of Victims of Uninsured Drivers" Agreement (Production No. 29/1 of Process).
[3] The pursuer is the mother of the late Paul Michael Ross ("the deceased").
[4] She sues as an individual seeking damages in respect of her son's death.
[5] The deceased was one of three passengers in a car being driven by Sean Flynn, the first defender, at the time of the accident.
[6] On 31 May 2002 in the High Court in Edinburgh the first defender was convicted of causing death by dangerous driving, driving without a licence and driving without insurance.
[7] The second defenders are the Motor Insurers Bureau (the "MIB").
[8] In this action, the pursuer seeks:-
(1) decree for payment of damages by the first defender, and
(2) decree for declarator.
[9] The conclusion for declarator is in the following terms:-
"2. For declarator that, in terms of the Agreement between the second defenders and the Secretary of State for the Environment, Transport and the Regions dated 13th August, 1999, the second defenders are liable to satisfy any decree pronounced against the first defender in the event of such decree or part thereof becoming an unsatisfied judgment as defined by the said Agreement."
[10] The case came before me by way of a proof before answer restricted to the question of liability.
[11] The proof was originally ordered to be restricted to the questions of (1) the liability of the first defender to the pursuer; (2) the contributory negligence on the part of the deceased; and (3) the liability of the second defenders under the uninsured drivers agreement reserving for future determination all questions of quantum.
[12] Helpfully, many of the central facts were agreed by way of a Joint Minute (No. 36A of Process) which I will outline below.
[14] In the result the only live issue before me was question numbered (3), namely, the liability of the second defenders under the uninsured drivers agreement.
[15] I also heard evidence from Roger Snook of the MIB which I will also outline below.
[16] I was subsequently addressed by counsel in relation to the English case of Louise Jestina Phillips (as representative of the estate of Neville Britton Phillips deceased) v Mohammed Rafiq and Motor Insurers Bureau which is reported at [2006] EWHC 1461 (QB) and, on appeal, at [2007] EWCA Civ 74 ("the case of Phillips").
[17] At the proof, Mr Ellis QC and Mr Primrose appeared for the pursuer. The pursuer argued that on a proper construction of the 1999 Agreement the MIB are liable to satisfy any decree pronounced against the first defender and that decree of declarator should be pronounced as sought.
[18] Mr Forsyth appeared on behalf of the first defender who admitted liability. Mr Forsyth simply sought leave to withdraw from the proof as the issues were not of direct interest.
[19] Mr Ferguson QC and Mr Dunlop appeared for the second defenders (the "MIB") at the proof. The second defenders submitted that that on a proper construction of the 1999 Agreement the MIB were not liable and that decree of declarator should be refused. The second defenders should therefore be granted decree of absolvitor.
[20] Most recently, on 19 April 2007, I heard further argument from Mr Ellis and Mr Dunlop in relation to the Appeal Court Decision in the case of Phillips.
[21] In the whole circumstances, and for the reasons outlined below, I am satisfied that the pursuer's submissions fall to be preferred.
[22] I agree with the conclusions of the Court of Appeal in England and Wales in the case of Phillips.
[23] I am not satisfied that Phillips can be distinguished.
[24] I was not persuaded by any of the additional arguments presented on behalf of the MIB before me.
[25] I shall therefor grant the declarator sought by the pursuer in terms of the second conclusion of the summons.
[26] I shall continue the cause on the question of expenses.
[27] I shall also put the case out "By Order" in respect of further procedure.
The Motor Insurers Bureau ("the MIB")
[28] At the outset, it might be helpful to say a few preliminary words about the establishment and function of the MIB.
[29] Those matters were outlined by Lord Nicholls of Birkenhead in White v White [2001] UKHL 9 (at paragraphs 6 and 7) as follows:-
"6. At the end of the war the insurers set up the Motor Insurers' Bureau, which for brevity I will refer to as 'MIB'. MIB is a company incorporated under the Companies Acts. Its primary object is to satisfy judgments in respect of any liability required to be covered by contracts of insurance under the Road Traffic Acts. Its members comprise all insurers who are for the time being transacting compulsory motor vehicle insurance in this country. MIB is funded by levies payable by its members. The amount of the levy is based on the premium income of the members. Ultimately, therefore, the funds of MIB come from the pockets of law abiding motorists who have complied with their statutory insurance obligations.
7. The obligations of MIB are not to be found in an Act of Parliament. Instead, they are the subject of agreement with the appropriate minister. The first agreement was made on 17 June 1946, between the Minister of Transport and MIB. From time to time this has been brought up to date with supplemental agreements. The latest supplemental agreement is dated 13 August 1999, made between the Secretary of State for the Environment, Transport and the Regions and MIB."
[30] In the case of Phillips, Lord Justice Ward also provided a summary of the background to the MIB scheme for the compensation of victims of uninsured drivers (at paragraph 10) as follows:-
"The Road Traffic Act 1930 made it compulsory for motor vehicles to be insured against third party risks yet the Act gave no protection to those third parties where the negligent motorist had failed to comply with his statutory obligation to insure. That lacuna was filled in 1946 by motor insurers setting up the M.I.B. to satisfy judgments where the use of the vehicle should have been covered by contracts of insurance under the Road Traffic Acts. All motor insurers are members of the Bureau. The Bureau's funds are obtained from levies charged upon insurers and so come from the premiums which are charged by those insurers to members of the public. The obligations of the M.I.B. arise from agreements made with the Minister of Transport, now the Secretary of State for the Environment, Transport and the Regions. Agreements were made in 1946, 1971, 1972, on 21st December 1988 ("the 1988 agreement") and on 13th August 1999 ('the 1999 Agreement')."
[31] I turn now to the pleadings.
The Pleadings in the present case
[32] The pleadings are contained in the Closed Record No 36 of Process.
[33] The pursuer's claim against the first defender is based on fault at common law (Article 6 of Condescendence).
[34] It is a matter of agreement that the accident was caused by fault and negligence on the part of the first defender and that the deceased was wearing a seat belt (see paragraphs 4 and 5 of the Joint Minute No 36A of Process - below).
[35] The pursuer's averment relating to damages are contained in Article 5 of Condescendence. The pursuer's claim is for "loss of society" - under section 1(4) of the Damages (Scotland) Act 1976. The pursuer also avers that she has suffered a loss of support and a loss of services and that she incurred funeral costs.
[36] It is also a matter of admission on Record (based on Answer 2) that in terms of the Agreement between the second defenders and the Secretary of State for the Environment, Transport and the Regions, dated 13 August 1999 (the Uninsured Drivers' Agreement) the second defenders (the MIB) agreed, subject to certain conditions, to satisfy any unsatisfied judgment pronounced against a driver who, at the time of the road traffic accident, was not covered by a Contract of Insurance as required by the Road Traffic Acts.
[37] In Article 6 of Condescendence the pursuer avers, inter alia (at page 16B-E):-
"... the second defenders are not entitled to rely upon Clause 6.1(e) of the Uninsured Drivers Agreement to avoid liability to satisfy any judgment pronounced in the present proceedings. In terms of the Uninsured Drivers' Agreement the claimant is the pursuer. The terms of said Agreement are clear and unambiguous. There is no provision therein which entitles the second defenders to rely upon the alleged knowledge of the deceased person in respect of the insurance arrangements for a vehicle in order to avoid liability for a claim made by a relative of the deceased against the driver of such a vehicle. Had the defenders wished to enable themselves to rely upon the alleged knowledge of a deceased person in such circumstances a Clause to that effect could have been inserted into the Agreement. The knowledge of the deceased is irrelevant in the context of the present claim. The second defenders are obliged to satisfy any judgments pronounced against the first defender in the present proceedings."
[38] In Answer 6 the second defenders (the MIB) aver inter alia (at page 18A-19E):-
"... insofar as the pursuer directs this action against the second defenders, her ability to do so turns on the terms of the Uninsured Driver's Agreement. In terms of Clause 6.1(e) thereof, the second defenders are not liable to satisfy any judgment where, at the time of the accident, the claimant was allowing himself to be carried on a vehicle at a time when he knew or ought to have known that the vehicle was being used without there being in force in relation to its use a contract of insurance as would comply with the Road Traffic Acts .... In the circumstances, at the time of the accident with which the present action is concerned the deceased was allowing himself to be carried on a vehicle at a time when he knew or ought to have known that the vehicle was being used without there being in force in relation to its use a contract of insurance as would comply with the Road Traffic Acts .... The Uninsured Driver's Agreement defines 'claimant' as meaning 'unless the context otherwise requires ... a person who had commenced or who proposes to commence relative proceedings and has made an application under this Agreement in respect thereof'. In the context of a fatal claim, such as this, that meaning makes no sense. Accordingly, in the context of a fatal claim the word 'claimant' as used in Clauses 6.1 and 6.2 of the Uninsured Drivers' Agreement means the person in respect of whose injury and death the action is brought, viz the deceased. In any event, the pursuer's claim to damages can be no higher than that which would have been held by the deceased, had he survived. If the deceased had survived and sought payment from the second defenders they would have been able to rely on Clause 6.1(e). In the same way, the second defenders are entitled to rely on the same Clause with regard to an action based upon the death of the deceased. Accordingly, the second defenders are not liable to satisfy any judgment pronounced against the first defender in the present action."
[39] The pursuer in the present case was not travelling in the vehicle at the material time and she had no personal knowledge of the lack of insurance. That was not disputed.
The Joint Minute for the Parties
[40] Helpfully, counsel for the parties in the present case also entered into a Joint Minute which is Number 36A of Process.
[41] In particular, the Joint Minute provides that, for the purposes of the present action only, the parties (the pursuer, the first defender and the second defenders) are agreed as follows, namely:-
"1. That the pursuer is the mother of the late Paul Michael Ross ('the deceased') who was born on 29 October 1982 and who died on 14 January 2001.
2. That the deceased died as a result of injuries received in a road traffic accident ('the accident') on 14 January 2001 on Calder Road near the junction with Calder House Road.
3. That at the time of the accident the deceased was a rear seat passenger in a BMW 325 motor car registration number E715 NFS ('the vehicle') driven by the first defender.
4. That the accident was caused by fault and negligence on the part of the first defender.
5. That at the time of the accident the deceased was wearing a seat belt.
6. That No. 29/1 of Process is a copy of the Agreement between The Secretary of State for the Environment, Transport and the Regions and the second defenders dated 13 August 1999 ('the Agreement').
7. That at the time of the accident the vehicle was being used without there being in force in relation to its use such a contract of insurance as would comply with Part VI of the Road Traffic Act 1988.
8. That at the time of the accident the deceased was voluntarily allowing himself to be carried in the vehicle and at all material times knew or ought to have known - within the meaning of Clause 6.1(e)(ii) of the Agreement - that the vehicle was being used without there being in force in relation to its use a contract of insurance as would comply with Part VI of the Road Traffic Act 1988.
8A. That had the deceased been injured (and) survived the accident, and had he raised an action against the first defender in respect of personal injuries sustained by him therein, the second defenders would not, as a result of the knowledge referred to in paragraph 8 above and the exception contained in Clause 6.1(e)(ii) of the Agreement, have been obliged to satisfy any unsatisfied judgment obtained in any such action.
9. That unless Clause 6.1(e)(ii) of the Agreement applies to the present claim made by the pursuer, the second defenders will be obliged in terms of the Agreement to satisfy any unsatisfied judgment obtained by the pursuer against the first defender in this action.
10. The first defender and the second defenders no longer maintain any argument of contributory negligence on the part of the deceased.
11. The defenders no longer maintain any argument that the deceased was involved in a joint criminal enterprise at the time of the accident or that the vehicle was being used in the course or furtherance of a crime at the time of the accident and do not maintain any argument based thereon or on the maxim ex turpi causa non oritur actio.
12. That No. 29/2 of Process is a copy of the agreement dated 21 December 1988 between The Secretary of State for Transport and the second defenders.
13. That No. 29/3 of Process is a copy of the agreement dated 22 November 1972 between The Secretary of State for the Environment and the second defenders.
14. That No. 29/4 of Process is a copy of the agreement dated 1 February 1971 between The Secretary of State for the Environment and the Motor Insurers Bureau.
15. That the Civil Procedure Rules applicable to England and Wales ('the CPR') were introduced by Statutory Instrument SI 1998/3132 and came into effect on 26 April 1999.
16. That prior to the coming into effect of the CPR, persons pursuing a claim in England and Wales were referred to as 'plaintiffs'.
17. That since the coming into effect of the CPR, persons pursuing a claim in England and Wales are referred to as 'claimants'.
18. That copies of all productions are to be treated as principals."
Productions
[42] During the hearings reference was made to the following productions (in the inventory for the second defenders No 29 of Process) namely:-
29/1 Agreement dated 13 August 1999 between the Secretary of State for the Environment, Transport and the Regions and the Motor Insurers Bureau.
29/2 Agreement dated 21 December 1988 between the Secretary of State for the Environment, Transport and the Regions and the Motor Insurers Bureau.
29/3 Agreement dated 22 November 1972 between the Secretary of State for the Environment, Transport and the Regions and the Motor Insurers Bureau.
29/4 Agreement dated 1 February 1971 between the Secretary of State for the Environment, Transport and the Regions and the Motor Insurers Bureau.
29/5 Second Council Directive 84/5/EEC of 30 December 1983 on the approximation of the laws of the Member States relating to insurance against civil liability in respect of the use of motor vehicles, and
29/6 Third Council Directive 90/232/EEC of 14 May 1990 on the approximation of the laws of the Member States relating to insurance against civil liability in respect of the use of motor vehicles.
[43] It might be helpful to outline some of the more salient features of the Agreements and the EC Directives.
The Uninsured Drivers Agreements and the EC Directives
The 1999 Agreement (No. 29/1 of Process)
[44] The 1999 Agreement lies at the centre of this case. It is dated 13 August 1999 and it is between the Secretary of State for the Environment, Transport and the Regions and the Motor Insurers Bureau. It is Production No 29/1 of Process.
[45] During the course of argument, reference was made in particular to Clauses 1, 5.1, 6.1, 6.2, 6.4, 6.5, 7.1, 7.2, 9.1, 10.2, 12.1, 15.1, and 17.1 and to the Notes for Guidance, preamble and Notes 1.1, 3, 3.6, 3.6.1 and 3.6.2.
[46] Clause 1 of the 1999 Agreement relates to "Interpretation" and provides "General Definitions".
[47] In particular, Clause 1 provides, inter alia:-
"1. In this Agreement, unless the context otherwise requires, the following expressions have the following meanings - ...
'claimant' means a person who has commenced or who proposes to commence relevant proceedings and has made an application under this Agreement in respect thereof;
'contracts of insurance' means a policy of insurance or a security covering a relevant liability; ...
'relevant liability' means a liability in respect of which a contract of insurance must be in force to comply with Part VI of the 1988 Act [that is, the Road Traffic Act 1988];
'relevant proceedings' means proceedings in respect of a relevant liability ...;
'unsatisfied judgment' means a judgment or order (by whatever name called) in respect of a relevant liability which has not been satisfied in full within seven days from the date upon which the claimant became entitled to enforce it."
[48] Clause 5 relates to the "MIB's obligation to satisfy compensation claims".
[49] Clause 5 provides as follows:-
"5.1 Subject to clauses 6 to 17, if a claimant has obtained against any person in a Court in Great Britain a judgment which is an unsatisfied judgment then MIB will pay the relevant sum to, or to the satisfaction of, the claimant or will cause the same to be so paid.
5.2 Paragraph (1) applies whether or not the person liable to satisfy the judgment is in fact covered by a contract of insurance and whatever may be the cause of his failure to satisfy the judgment."
[50] Clause 6 relates to "Exceptions to Agreement".
[51] In particular, Clause 6 provides inter alia:-
"6.1 Clause 5 does not apply in the case of an application made in respect of a claim of any of the following descriptions ...
(c) a claim by, or for the benefit of, a person ("the beneficiary") other than the person suffering death, injury or other damage which is made either -
(i) in respect of a cause of action or a judgment which has been assigned to the beneficiary, or
(ii) pursuant to a right of subrogation or contractual or other right belonging to the beneficiary; ...
(e) a claim which is made in respect of a relevant liability described in paragraph (2) by 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 -
(i) the vehicle had been stolen or unlawfully taken, (or)
(ii) the vehicle was being used without there being in force in relation to its use such a contract of insurance as would comply with Part VI of the 1988 Act, ...
6.2 The relevant liability referred to in paragraph (1)(e) is a liability incurred by the owner or registered keeper or a person using the vehicle in which the claimant was being carried.
6.3 The burden of proving that the claimant knew or ought to have known of any matter set out in paragraph (1)(e) shall be on the MIB ...
6.4 Knowledge which the claimant has or ought to have for the purposes of paragraph (1)(e) includes knowledge of matters which he could reasonably be expected to have been aware of had he not been under the self-induced influence of drink or drugs.
6.5 For the purposes of this clause - ...
(b) references to a person being carried in a vehicle include references to his being carried upon, entering, getting on to and alighting from the vehicle, ..."
[52] Clauses 7 to 15 of the 1999 Agreement make provisions for "Conditions precedent to MIB's Obligation".
[53] The words "the claimant" appear in various clauses of the 1999 Agreement including:-
Clause 7.2 - in relation to signing an application;
Clause 9.1 - in relation to giving notice of relevant proceedings;
Clause 10.2 - in relation to giving notice of service of proceedings;
Clause 12.1 - in relation to giving notice of intention to apply for judgment; and
Clause 15.1 - in relation to assignment of judgment and undertakings.
[54] Clause 17.1 relates to "Compensation received from other sources" and provides inter alia that:-
"17.1 Where a claimant has received compensation from - ...
(b) an insurer under an insurance agreement or arrangement, or
(c) any other source, in respect of the death, bodily injury or other damage to which the relevant proceedings relate and such compensation has not been taken into account in the calculation of the relevant sum, MIB may deduct from the relevant sum ... an amount equal to that compensation."
[55] There are also "Notes for the Guidance of Victims of Road Traffic Accidents" at the end of the 1999 Agreement (at page 10 to 16 of No 29/1 of Process).
[56] In the preamble to the guidance notes (at the top of page 11) it is stated inter alia:-
"The following notes are for the guidance of anyone who may have a claim on the Motor Insurers' Bureau under this Agreement and their legal advisers. They are not part of the Agreement, their purpose being to deal in ordinary language with the situations which most readily occur. They are not in any way a substitute for reading and applying the terms of this or any other relevant Agreement. At the request of the Secretary of State, these notes have been revised with effect from 15th April 2002 and in their revised form have been agreed and approved by MIB, the Law Society of England and Wales, the Law Society of Scotland, the Motor Accident Solicitors' Society and the Association of Personal Injury Lawyers. Any application made under the Agreement after this date (unless proceedings have already been issued) will be handled by MIB in accordance with these notes.
Where proceedings have been issued in Scotland, for the words "Claimant" and 'Defendant' there shall be substituted in these Notes where appropriate the words 'Pursuer' and 'Defender' respectively."
[57] Paragraph 1.1 of the guidance notes states:-
"The role of MIB under this Agreement is to provide a safety net for innocent victims of drivers who have been identified but are uninsured. MIB's funds for this purpose are obtained from levies charged upon insurers and so come from the premiums which are charged by those insurers to members of the public."
[58] Paragraph 3 of the guidance notes states inter alia:-
"3. Claims which MIB is not obliged to satisfy.
MIB is not liable under the Agreement in the case of the following types of claim. ...
3.6 A claim made by a passenger in a vehicle where the loss or damage has been caused by the user of that vehicle if:-
3.6.1 the use of the vehicle was not covered by a contract of insurance; and
3.6.2 the claimant knew or could be taken to have known that the vehicle was being used without insurance ... ."
[59] The provisions of the earlier Agreements and Directives (so far as founded upon by the parties) might be summarised in chronological order as follows.
The 1971 Agreement (No. 29/4 of Process)
[60] The Agreement dated 1 February 1971 between the Secretary of State for the Environment, Transport and the Regions and the Motor Insurers Bureau is produced as No. 29/4 of Process.
[61] Reference was made in particular to Clause 5.(1)(c) and 6.
[62] Clause 5 related to certain "Conditions precedent to MIB's liability".
[63] Clause 5(1)(c) referred to "the person bringing the proceedings" taking all reasonable steps to obtain judgment against all the tort-feasors responsible.
[64] Clause 6 made provision for certain "Exemptions".
The 1972 Agreement (No. 29/3 of Process)
[65] The Agreement dated 22 November 1972 between the Secretary of State for the Environment, Transport and the Regions and the Motor Insurers Bureau is produced as No. 29/3 of Process.
[66] Reference was made in particular to Clause 6.(1)(c).
[67] Clause 6 related to "Exemptions" and provides inter alia that:-
"(1) MIB shall not incur any liability under Clause 2 of this Agreement in a case where -
(c) at the time of the accident the person suffering death or bodily injury in respect of which the claim is made was allowing himself to be carried in a vehicle and - ...
(ii) being the owner of or being the person using the vehicle, he was using or causing or permitting the vehicle to be used without there being in force in relation to such use a contract of insurance as would comply with Part VI of the Road Traffic Act 1972, knowing or having reason to believe that no such contract was in force."
The 1983 (Second) Directive (No. 29/5 of Process)
[68] The Second Council Directive 84/5/EEC of 30 December 1983 on the approximation of the laws of the Member States relating to insurance against civil liability in respect of the use of motor vehicles is produced as No. 29/5 of Process.
[69] Reference was made in particularly the preambles and Article 1.4.
[70] One of the preambles (on page 2 of No 29/5 of Process) recites inter alia:
"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 ... whereas, however, Member States should be given the possibility of applying certain limited exclusions as regards the payment of compensation by that body ..."
[71] Another preamble (on page 2) recites:-
"Whereas the members of the family of the insured person, driver or any other person liable should be afforded protection comparable to that of other third parties, in any event in respect of their personal injuries;"
[72] Article 1.4 (on page 3) provides inter alia:
"Each Member State shall set up or authorise 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 ... a vehicle for which the insurance obligation ... has not been satisfied. ...
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."
The 1988 Agreement (No. 29/2 of Process)
[73] The Agreement dated 21 December 1988 between the Secretary of State for the Environment, Transport and the Regions and the Motor Insurers Bureau is produced as No. 29/2 of Process.
[74] Reference was made in particular to Clauses 5.1, 6.1, and 6.2.
[75] Clause 5.1 of the 1988 relates to "Conditions Precedent to MIB's liability".
[76] The words "the person bringing the proceedings" also appear in various clauses of the 1988 Agreement including:-
Clause 5.1 (b) - in relation to furnishing the MIB with information,
Clause 5.1(c) - in relation to demanding information, and
Clause 5.1(d) - in relation to taking steps to obtain judgments against all the persons liable.
[77] Clause 6 of the 1988 Agreement relates to "Exceptions" and provides inter alia:-
"6.1 M.I.B. shall not incur any liability under clause 2 of this Agreement in a case where: ...
(d) the claim is in respect of damage to property which consist of damage to a motor vehicle or losses arising therefrom if at the time of the use giving rise to the damage to the motor vehicle there was not in force in relation to the use of that vehicle when the damage to it was sustained such a policy of insurance as is required by Part VI of the Road Traffic Act 1972 and the person or persons claiming in respect of the loss or damage either knew or ought to have know that that was the case;
(e) at the time of the use which gave rise to the liability the person suffering death or bodily injury or damage to property was allowing himself to be carried in or upon the vehicle and either before the commencement of his journey in the vehicle or after such commencement he could reasonably be expected to have alighted from the vehicle he -
(i) knew or ought to have known that the vehicle had been stolen or unlawfully taken, or
(ii) knew or ought to have known that the vehicle was being used without there being in force in relation to its use such a contract of insurance as would comply with Part VI of the Road Traffic Act 1972.
6.2 The exceptions specified in sub-paragraph (1)(e) of this Clause shall apply only in a case where the judgment in respect of which the claim against MIB is made was obtained in respect of a relevant liability incurred by the owner or a person using the vehicle in which the person who suffered death or bodily injury or sustained damage to property was being carried."
The 1990 (Third) Directive (No. 29/6 of Process)
[78] The Third Council Directive 90/232/EEC of 14 May 1990 on the approximation of the laws of the Member States relating to insurance against civil liability in respect of the use of motor vehicles is produced as No. 29/6 of Process.
[79] Brief reference was made to the preambles (on page 2 of No 29/6).
[80] One of the preambles recites:-
"Whereas there are, in particular, gaps in the compulsory insurance cover of motor vehicle passengers in certain member States; whereas, to protect this particularly vulnerable category of potential victims, such gaps should be filled".
[81] I turn now to mention the authorities cited.
Authorities
[82] The pursuer's authorities included:-
1. Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 particularly Lord Hoffman at page 912F - 913F.
2. Prenn v Simmonds [1971] 1 WLR 1381.
3. Bank of Scotland v Dunedin Property Investment Co Ltd 1998 SC 657 particularly The Lord President (Roger) at pages 661D-H, 665D-F, and 667C-D.
4. The Howgate Shopping Centre Ltd v Catercraft Services Ltd 2004 SLT 231, Lord Macfadyen, particularly at pages 238H-L, 241H-K, and 244A-C (paragraphs [24], [34], [35], and [43]).
5. Bank of Credit and Commerce International SA v Ali and others [2002] 1 AC 251, particularly Lord Clyde at pages 281G - 282C (paragraph 78).
6. Mackie's Executrix v AB 2000 Ltd, 2004 SLT 14, particularly at pages 143I-J, and 143K-L (paragraphs [6] and [7]).
7. The Law Reform (Contributory Negligence) Act 1945 (8 & 9 Geo. 6, c. 28), particularly sections 1(1), and 1(4), and
8. Donaldson v Hays Distribution Services Ltd 2005 SC 523, particularly at page 535 - 536 (paragraphs [29] - [30]).
[83] The second defenders' authorities included:-
1. White v White and another [2001] 1 WLR 481, particularly Lord Nicholls of Birkenhead at pages 484G- 485F, 486G-H, 487E-G, and 488C-F (paragraphs 10-12, 17, 20 and 23).
2. Mannai Investment Co. Ltd. v Eagle Star Life Assurance Co. Ltd. [1997] AC 749, particularly Lord Steyn at page 767G-H, 771A-C, and 772H and Lord Hoffman at page 774C-H, 775C-F and 779F-H and Lord Clyde at 782C-D.
3. Investors Compensation Scheme Ltd. v West Bromwich Building Society [1998] 1 WLR 896 particularly Lord Hoffman at page 912F - 913F.
4. Bank of Credit and Commerce International SA v Ali and others [2002] 1 AC 251, particularly Lord Bingham of Cornhill at page 259F-H (paragraph 8), Lord Hoffman at page 268H-269A and 269D-G (paragraphs 37 and 39) and Lord Clyde at pages 281G - 282C (paragraph 78).
5. Sirius International Insurance Co (Publ) v FAI General Insurance Ltd and others [2004] 1 WLR 3251, particularly Lord Steyn at page 3257H-3258D (paragraph 19).
6. Bank of Scotland v Dunedin Property Investment Co Ltd 1998 SC 657.
7. Isabella McKay v Scottish Airways Limited 1948 SC 254, particularly The Lord President (Cooper) at page 264.
8. The Road Traffic Act 1988 (c. 52) particularly sections 143(1) and (2), 145(1) and (3)(a), and 151(1), (2) and (4).
9. The Damages (Scotland) Act 1976 (c. 13), and
10. Lauren Louise Sheldon v Goldstraw, MIB and Birchall, a decision of His Honour Judge Tetlow in Alrtincham Country Court, 18 May 2004 (Case No. OL306876).
[84] I was also referred in detail to the English case of Louise Jestina Phillips (as representative of the estate of Neville Britton Phillips deceased) v Mohammed Rafiq and Motor Insurers Bureau at first instance [2006] EWHC 1461 (QB) and in the Court of Appeal (Civil Division) [2007] EWCA Civ 74. See further below.
[85] Mr Dunlop also provided a reference to Jameson and another v Central Electricity Generating Board [2000] 1 A.C. 455.
Interpretation
[86] The issue before me is essentially one of construction of the 1999 Agreement.
[87] As outlined above, I was referred to various authorities on interpretation including passages from the speeches of Lord Hoffmann in Mannai Investment Co. Ltd v Eagle Star Assurance Co. Ltd. [1997] AC 749 and Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896.
[88] In the Phillips case Lord Justice Ward outlined the modern principles (at paragraphs 8 and 9) as follows:-
"8. It is common ground between the parties that the proper approach is, of course, the enunciation of principle expressed by Lord Hoffman in I.C.S. Ltd v West Bromwich B.S. [1998] A.C. 896, 912:
(1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.
(2) The background was famously referred to by Lord Wilberforce as the 'matrix of fact,' but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.
(3) The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. ...
(4) The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax: (see Mannai Investments Co. Ltd. v Eagle Star Life Assurance Co. Ltd. [1997] A.C. 749 ).
(5) The 'rule' that words should be given their 'natural and ordinary meaning' reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said in The Antaios Compania Naviera S.A. v Salen Rederierna A.B. [1985] A.C. 191, 201:
'... if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense.'
9. Our attention was also drawn to R (Westminster City Council) v National Asylum Support Service [2002] UKHL 38 [2002] 1 W.L.R. 2956 where Lord Steyn explained in paragraph 5:
'The starting point is that language in all legal texts conveys meaning according to the circumstances in which it was used. It follows that the context must always be identified and considered before the process of construction or during it. It is therefore wrong to say that the court may only resort to evidence of the contextual scene when an ambiguity has arisen.'"
[89] Bearing in mind the various authorities listed above, I find that a helpful summary.
Statutory Provisions
[90] It might also be helpful to set out some of the statutory provisions referred to by counsel.
The Law Reform (Contributory Negligence) Act 1945
[91] Section 1(1) of the Law Reform (Contributory Negligence) Act 1945 (8 & 9 Geo. 6, c. 28) relates to "apportionment of liability in case of contributory negligence" and provides:-
"(1) Where any person suffers damage as the result partly of his own fault and partly of the fault of any other person or persons, a claim in respect of that damage shall not be defeated by reason of the fault of the person suffering the damage, but the damages recoverable in respect thereof shall be reduced to such extent as the court thinks just and equitable having regard to the claimant's share in the responsibility for the damage:
Provided that--
(a) this subsection shall not operate to defeat any defence arising under a contract;
(b) where any contract or enactment providing for the limitation of liability is applicable to the claim, the amount of damages recoverable by the claimant by virtue of this subsection shall not exceed the maximum limit so applicable."
[92] Section 1(4) of the 1945 Act, as applicable to Scotland by virtue of section 5(c), provides:-
"(4) Where any person dies as the result partly of his own fault and partly of the fault of any other person or persons, a claim by any dependant of the first mentioned person for damages or solatium in respect of that person's death shall not be defeated by reason of his fault, but the damages or solatium recoverable shall be reduced to such extent as the court thinks just and equitable having regard to the share of the said person in the responsibility for his death."
The Damages (Scotland) Act 1976
[93] General reference was also made to the Damages (Scotland) Act 1976 (c 13).
[94] Section 1 of the 1976 Act relates to "Rights of relatives of a deceased person" and provides, inter alia:-
"(1) Where a person dies in consequence of personal injuries sustained by him as a result of an act or omission of another person, being an act or omission giving rise to liability to pay damages to the injured person or his executor, then, subject to the following provisions of this Act, the person liable to pay those damages (in this section referred to as "the responsible person") shall also be liable to pay damages in accordance with this section to any relative of the deceased, being a relative within the meaning of Schedule 1 to this Act. ...
(3) The damages which the responsible person shall be liable to pay to a relative of a deceased under this section shall (subject to the provisions of this Act) be such as will compensate the relative for any loss of support suffered by him since the date of the deceased's death or likely to be suffered by him as a result of the act or omission in question, together with any reasonable expense incurred by him in connection with the deceased's funeral.
(4) Subject to subsection (4A), if the relative is a member of the deceased's immediate family (within the meaning of section 10(2) of this Act) there shall be awarded, without prejudice to any claim under subsection (3) above, such sum of damages, if any, as the court thinks just by way of compensation for all or any of the following--
(a) distress and anxiety endured by the relative in contemplation of the suffering of the deceased before his death;
(b) grief and sorrow of the relative caused by the deceased's death;
(c) the loss of such non-patrimonial benefit as the relative might have been expected to derive from the deceased's society and guidance if the deceased had not died,
and the court in making an award under this subsection shall not be required to ascribe specifically any part of the award to any of paragraphs (a), (b) and (c) above."
The Road Traffic Act 1988
[95] I was also referred to the Road Traffic Act 1988 (c. 52).
[96] I need not rehearse the terms of sections 143 or 145 of the 1988 Act. Section 143 makes provision for the users of vehicles to be insured against third-party risks. Section 145 deals with requirements in respects of policies of insurance.
[97] Section 151 of the 1988 Act relates to "Duty of insurers or persons giving security to satisfy judgment against persons insured or secured against third-party risks" and provides, inter alia:-
"(1) This section applies where, after a certificate of insurance or certificate of security has been delivered under section 147 of this Act to the person by whom a policy has been effected or to whom a security has been given, a judgment to which this subsection applies is obtained.
(2) Subsection (1) above applies to judgments relating to a liability with respect to any matter where liability with respect to that matter is required to be covered by a policy of insurance under section 145 of this Act and either-
(a) it is a liability covered by the terms of the policy or security to which the certificate relates, and the judgment is obtained against any person who is insured by the policy or whose liability is covered by the security, as the case may be, or
(b) it is a liability, other than an excluded liability, which would be so covered if the policy insured all persons or, as the case may be, the security covered the liability of all persons, and the judgment is obtained against any person other than one who is insured by the policy or, as the case may be, whose liability is covered by the security. ...
(4) In subsection (2)(b) above 'excluded liability' means a liability in respect of the death of, or bodily injury to, or damage to the property of any person who, at the time of the use which gave rise to the liability, was allowing himself to be carried in or upon the vehicle and knew or had reason to believe that the vehicle had been stolen or unlawfully taken, not being a person who--
(a) did not know and had no reason to believe that the vehicle had been stolen or unlawfully taken until after the commencement of his journey, and
(b) could not reasonably have been expected to have alighted from the vehicle.
In this subsection the reference to a person being carried in or upon a vehicle includes a reference to a person entering or getting on to, or alighting from, the vehicle."
[98] I should also summarise the evidence given by Mr Snook.
The evidence of Roger Dudley Snook
[99] The evidence which Mr Snook gave at the proof has now been produced as a transcript, dated 26 April 2007, which can be referred to for its full terms.
[100] In overview, however, his evidence might be summarised along the following lines.
[101] In examination-in-chief, Mr Snook explained that he was formerly employed by the MIB. He was born in 1947 and he retired on 1 February 2006. Prior to his retiral his title and role within the MIB was that of Technical Director which involved, amongst other duties, negotiation of agreements with the government in London. He had held that post since the year 2000. Prior to that he was the Claims Manager of the MIB and the role of Technical Director did not exist. In his role of Claims Manager he had, however, attended every board meeting and was, de facto, a director. He had in effect been doing precisely the same thing since 1988 albeit under two different titles.
[102] The discussions which led to the 1988 MIB Agreement were prior to his appointment. His role was in operating a claims department with the MIB and handling claims under that agreement. There were some difficulties in operating the 1988 Agreement because "the wording within it was quite broad and we did have a deal of difficulty with lawyers in England who found the lack of explanation of how claims were handled within the agreement difficult". Mr Snook was not particularly aware of any other difficulties encountered with the operation of the 1988 Agreement.
[103] The 1999 MIB Agreement (No. 29/1 of Process) came into force on 1 October 1999. It superseded the 1988 Agreement (No. 29/2 of Process). There were other prior Agreements in 1972 (No. 29/3) and 1971 (No. 29/4).
[104] Mr Snook gave evidence to the effect that the history of this MIB Agreement stemmed from a government inquiry (held he seemed to remember in 1935 or 1936) which came to the conclusion that "there was a gap in the protection afforded to victims and that could be best addressed by setting up an organisation to deal with the victims of uninsured motorists".
[105] The 1988 Agreement came about because of the Second Motor Insurance Directive (No. 29/5 of Process). That changed the compulsory insurance law and as a consequence the MIB Agreement had to change. The 1999 Agreement came about because the MIB itself "considered that as a consequence of all the rumbles we were getting from lawyers that it could be greatly improved".
[106] Mr Snook agreed that the "1988 Agreement was entered into in order to give effect to the Second Motor Directive" (page 6 lines 9-13).
[107] The 1999 Agreement (No 29/1 of Process) was also intended to give effect to that Directive in the sense that it "has to continue to comply with the laws that were changed as a consequence of the Second Directive ... but it was not constructed specifically to give any additional effect to the Second Directive".
[108] Mr Snook did not recall that the Third Directive (No. 29/6 of Process) was part of the motivation for the 1999 Agreement.
[109] In relation to the 1999 Agreement (No. 29/1 of Process) Mr Snook was referred in particular to Clauses 5.1 and 6.1.
[110] The obligation on the MIB to satisfy claims is to be found in Clause 5.1 and there is an exception to that obligation in Clause 6.1.
[111] In relation to "the exception" Mr Snook said (at page 8 lines 8 to 15), inter alia:-
"There was an equivalent provision in the previous agreements but the provision in the 1999 agreement is slightly wider. Specifically, it was trying to make matters clearer based on circumstances under which a victim would not be paid where they acknowledged they had been driving without insurance."
[112] Mr Snook agreed that there was in the 1988 Agreement, equally, an obligation and an exception "but it's in a different form of words".
[113] The position was similar in relation to the 1972 Agreement.
[114] Mr Snook was asked (at page 9 line 13) to clarify why it was necessary to redraft the Agreement between the 1988 version and the 1999 version and he replied as follows:-
"I mentioned before that there had been complaints from lawyers that the 1988 Agreement was too vague in its wording. Specifically, they referred to such matters as the giving of notice of the commencement of proceedings. Now, we thought about that. We felt there was some justice in their view. We made an approach to the then, I think it was the Department of Transport in those days, as to whether the agreement could be rewritten. ... It (the approach) would have been between 1992 and 1993."
[115] In the 1999 Agreement there is a definition of "claimant" in Clause 1 and the word "claimant" is used in Clauses 5.1 and 6.1.
[116] In relation to the word "claimant" Mr Snook explained (at page 10 line 23 et seq) that:-
"It was an expression that was new to this document and it was new very late in the drafting process. ... I recall that it was introduced late in (1998) by the parliamentary draftsman".
[117] Mr Ferguson, for the MIB, made it clear (on pages 11 and 12) that he was not interested in what Mr Snook thought the MIB were trying to achieve by a particular form of wording or indeed what he thought the Department of Transport tried to achieve by a particular form of wording. That was a matter for the Court after submissions. What he was interested in were the background circumstances in which the word "claimant" came to be used in the 1999 Agreement.
[118] It was pointed out that it had been agreed in Joint Minute (in paragraph 15 of No. 36A of Process) that the Civil Procedure Rules applicable to England and Wales ("the CPR") were introduced by Statutory Instrument SI 1998/3132 and came into effect on 26 April 1999.
[119] Mr Snook agreed that those Rules were commonly called the "Woolf Reforms" in England and he said (at page 13 line 8) that:-
"That was the reasons why, I'm given to understand, the parliamentary draftsman introduced that term ('claimant')".
[120] It was also a matter of agreement (in paragraphs 16 and 17 of the Joint Minute) that prior to the coming into effect of the CPR, persons pursuing a claim in England and Wales were referred to as "plaintiffs" and that since the coming into effect of the CPR, persons pursuing a claim in England and Wales are referred to as "claimants".
[121] Mr Snook also mentioned the English case Lauren Louise Sheldon v Goldstraw, MIB and Birchall, a decision of His Honour Judge Tetlow in Alrtincham Country Court, 18 May 2004 (Case No. OL306876). That decision (which is number 10 on the list of authorities for the second defenders) was in favour of the MIB and had not been appealed.
[122] In cross-examination (at pages 14 and 15) Mr Snook, inter alia, agreed with Mr Ellis "that the 1988 Agreement was produced in order to attempt to secure the UK agreement conformed to EU law".
[123] There was no re-examination.
Phillips v Rafiq and MIB
[124] The most recent relevant English authority is to be found in the case of Louise Jestina Phillips (as representative of the estate of Neville Britton Phillips deceased) v Mohammed Rafiq and Motor Insurers Bureau at first instance and on appeal.
[125] I was informed by Mr Dunlop, for the MIB, that leave to appeal to the House of Lords had been refused in the case of Phillips and that the intention of the MIB was to use the present Scottish case as a means of progressing the current live issues.
[126] In essence, counsel for the pursuer submitted that the decision in Phillips was correct. Although not binding on me, it was highly persuasive.
[127] Counsel for the MIB submitted that Phillips was wrong and that I should not hesitate to say so.
[128] The details of that case are as follows.
The Decision of His Honour Judge Richard Seymour in Phillips
[129] The decision Judge Seymour, sitting as a Judge of the High Court of Justice, Queen's Bench Division, in the case of Phillips is dated 11 May 2006 and is reported at [2006] EWHC 1461 (QB).
[130] The background can be outlined as follows.
[131] On 28 August 2002 Mr Neville Phillips was killed in a road traffic accident while travelling as the front seat passenger in his own Fiat Marea motor car ("the Car").
[132] At the time of purchasing the Car in 2001 Mr Phillips had arranged a temporary insurance cover note but he neglected to take steps to continue the insurance and his use of the Car was uninsured after Christmas Day 2001.
[133] As at 28 August 2002 Mr Phillips lived habitually with his wife, Mrs Louise Phillips, the claimant in this action, and his family.
[134] On 27 August 2002, the day before his death, Mr Phillips had been in Birmingham assisting a friend, Mr Mohammed Rafiq, the first defendant, to plaster and paint a shop belonging to members of Mr Rafiq's family. Once the work was completed, Mr Phillips and Mr Rafiq, set off back towards London in the Car with Mr Phillips driving. It appears that when they got to Walsall Mr Phillips and Mr Rafiq changed positions, so that thereafter Mr Rafiq was the driver and Mr Phillips was the front seat passenger. There were two other passengers, young relations of Mr Rafiq, Sadiyah Bint Rafiq and Moneba Bint Rafiq.
[135] That was the position when the Car crashed on the M25 motorway near Potters Bar at about 3.00 a.m. on 28 August 2002. Mr Phillips was very seriously injured in the accident and died in hospital later that day. The two young girls were also killed. Mr Rafiq survived.
[136] Mr Rafiq was not insured to drive the Car at the time of the accident.
[137] Mr Rafiq took no part in the action.
[138] The second defendants in the action were the MIB.
[139] It was anticipated that Mrs Phillips would in due course obtain a judgment against Mr Rafiq on the grounds that his negligence was the cause of the death of Mr Phillips.
[140] Judge Seymour explains (in paragraph 10 of his judgment) that Mrs Phillips's claims against Mr Rafiq were pursued on behalf of his estate pursuant to the provisions of Law Reform (Miscellaneous Provisions) Act 1934 and on behalf of his dependants pursuant to the provisions of Fatal Accidents Act 1976.
[141] In the Phillips case, the Defence served on behalf of MIB included the following (at paragraph 9):-
"For the avoidance of doubt and without prejudice to an exchange of witness statements the Second Defendant avers that:-
(a) The Deceased was the owner and registered keeper of the vehicle at the time of the accident.
(b) The Deceased had not arranged any insurance cover for the vehicle at the time of the accident.
(c) The Deceased, at the time of the accident, was voluntarily allowing himself to be carried in the vehicle when he knew or ought to have appreciated that the First Defendant was not covered by any insurance for his use of the vehicle.
In short, therefore the Deceased at the outset of the relevant journey which led ultimately to the accident, was content to allow himself to be carried in the vehicle when he knew or ought to have known it was being used without there being in force in relation to its use such a contract of insurance as would comply with Part VI of the Road Traffic Act 1988. As such, the Second Defendant accepts no liability in this case."
[142] In the light of those pleas it was ordered that there be tried a preliminary issue as to:- "whether the Second Defendant is liable to satisfy a judgment against the First Defendant in accordance with the Motor Insurers' Bureau Agreement dated 13 August 1999."
[143] That was the issue tried before Judge Seymour and, as can be seen, it is essentially the same issue which has come before me.
The MIB's submissions in Phillips
[144] The submission made on behalf of the MIB in Phillips are set out in detail in the judgment of Judge Seymour. I need not rehearse them all. On overview might be as follow.
Derivative Claim
[145] In Phillips, the MIB argued inter alia that the claim of the dependants under the Fatal Accident Act 1976 was a derivative claim. If the deceased could not have maintained an action to recover damages then his dependants cannot be in any better position. For example, if the accident had been caused entirely by the negligence of the Deceased then the dependants would have no cause of action. The MIB has no obligation to satisfy any judgment against Mr Rafiq by virtue of the exception provided by Clause 6.1(e)(ii). The fact that the Deceased had Clause 6.1(e)(ii) knowledge of the non-insured use of the vehicle rather than the dependants does not alter the situation. If the Deceased had the requisite knowledge for the purposes of the exception to the Agreement, then the dependants are fixed with that same knowledge and therefore the exception to the Agreement applies to a dependency claim as well as any claim that the Deceased may have brought but for his death. As the Deceased would have had no basis for a claim under the 1999 Agreement (because of his knowledge of uninsured use) the dependants can be in no better position and therefore they have no claim either. Accordingly, it was argued, the entitlement of the dependants to recover damages from the MIB is dependent on whether the Deceased would have had an entitlement but for his death. Any entitlement of the Dependants derives from the entitlement of the deceased and not the fact of the death of the deceased. It follows that if the Deceased had no entitlement then the dependants have no entitlement. Any other result would be "unconscionable" - so submitted the MIB to Judge Seymour.
The construction of the word "Claimant"
[146] The MIB also argued, in Phillips, that the claimant was applying too restrictive a definition of the word "claimant" in the context of Clause 6.1(e)(ii) and the Agreement as a whole. The definition of "claimant" in Clause 1 is subject to the proviso "unless the context otherwise requires". These words permit a flexible construction of the word "claimant" depending on the particular context in which it is used in the Agreement. The context in which the word "Claimant" is used in Clause 6.1(e)(ii) and in Clause 6.3(a) requires it to be interpreted so as to satisfy the purpose of Clause 6. It should be given a purposive reading in the context in which it is used. The purpose of Clause 6 is to set out exceptions to the Agreement. It excludes claims rather than permits claims. In particular, the purpose of Clause 6.1(e)(ii) is to exclude claims which arise out of the death or personal injury of a passenger with knowledge of non-insured use of the vehicle. Thus, if a claim for dependency arises out of the death of a passenger who had knowledge for the purpose of Clause 6.1(e)(ii), then the context of the Clause requires that any such claim is subject to the exception. To confine Clause 6 (1)(e)(ii) to claims by Claimant passengers with knowledge of non-insured use would be to open the door to dependants of such passengers to derive a benefit from the Agreement which the deceased would not have had. This would be so even if the dependants themselves knew that the driver was uninsured and encouraged the deceased to get into the car. So argued the MIB.
The background and context
[147] The MIB also advanced a further argument based on the background and context which might be summarised along the following lines. The background to the 1999 Agreement can be looked at by the Court in order to understand the meaning behind the wording of Clause 6. The 1999 Agreement is the fifth such Agreement since the formation of the MIB. It is the most extensive Agreement to date consisting of some 23 clauses. The 1999 Agreement contains significantly expanded conditions precedent which have to be fulfilled by applicants and a greater number of exceptions to the Agreement. Part of the background and context of the 1999 Agreement is the wording of its predecessors. Clause 6(1)(e)(ii) of the 1988 Agreement referred to "the person suffering death or bodily injury or damage to property". Those words ("the person suffering death or bodily injury or damage to property") were compressed in the 1999 Agreement into the words "the Claimant". The 1988 Agreement clearly excluded any claims arising out of the personal injury/death/damage to property of a passenger who knew of the non-insured use of the vehicle. In these circumstances, a dependency claim arising out of such a passenger's death would be excluded by the 1988 Agreement. The context of the 1999 Agreement itself and also the background to the 1999 Agreement requires that Clause 6.1(e)(ii) of the 1999 Agreement be interpreted to give effect to the purpose of the Clause, namely to exclude any claims arising out of personal injury or death or damage to property of a passenger who knew of the non-insured use of the vehicle including derivative dependency claims. So submitted the MIB.
The EC Directives
[148] In Phillips, the MIB also advanced an argument based on the EC Directives to the following effect. Clause 6.1(e)(ii) is based upon the derogation permitted by the EC Second Motor Insurance Directive, Directive 84/5/EEC, Article 1(4) of which provides that:-
"Member states may exclude the payment of compensation by [the MIB] in respect of persons who voluntarily entered the vehicle which caused the damage or injury when the [MIB] can prove that they knew it was uninsured."
The words emphasised ("in respect of persons" and "they") indicate that the exception is not confined to claims by passengers with knowledge of uninsured use but rather to the payment of compensation in respect of such persons. The payment of compensation to a dependant of such a passenger would, it was submitted, be the payment of compensation in respect of such a person and therefore a payment which the exception was designed to exclude.
Summary
[149] Judge Seymour (at paragraph 26) took the view that the MIB's submission amounted to this. That although there was a difference between the wording of the 1999 Agreement and that of the 1988 Agreement in relation to the implications of suffering injury whilst a passenger was being carried in a vehicle in respect of which it was known that there was no insurance, and in particular a new expression, "claimant", was used and was defined, the definition of "claimant" was only applicable "unless the context otherwise requires", and the context did otherwise require both in order to avoid anomalies and in order to give effect to the relevant intention of the parties to the 1999 Agreement, to be collected from the terms of clause 6(1)(e)(ii) of the 1988 Agreement and the terms of the permitted exception to the Second Insurance Directive.
[150] In effect, the MIB submitted in Phillips that the relevant provisions of the 1999 Agreement should be construed as if the 1988 Agreement were still in force and the 1999 Agreement had not been made.
[151] In the present case, before me, the MIB advanced substantially similar arguments but they also advance several "Additional Arguments for the MIB" which I will mention below under that heading.
The plaintiff's submissions in Phillips
[152] In Phillips, Mr Ritchie, counsel for the plaintiff, responded to the submissions of the MIB by contending that there was no justification in any of the points taken by Mr McKeon for adopting any construction of the 1999 Agreement other than that which he submitted was the plain and ordinary meaning of the relevant words. Mr Ritchie accepted that under the wording of clause 6.1(e)(ii) of the 1988 Agreement MIB would not have been bound to satisfy a judgment against Mr Rafiq in the circumstances of this case, but the wording of the 1999 Agreement was different. He submitted that it was irrelevant to the interpretation of the 1999 Agreement that a claim under Fatal Accidents Act 1976 depended upon a wrong having been done to the deceased in respect of which, had he lived, he would have had a cause of action. In the present case, averred Mr Ritchie, Mrs Phillips had a good cause of action against Mr Rafiq. That cause of action was in no way affected by the terms of the 1999 Agreement. The 1999 Agreement was relevant, and relevant only, to satisfaction of a judgment obtained in respect of that cause of action. What mattered was not whether, had Mr Phillips sued Mr Rafiq and obtained judgment in respect of his injuries MIB would have been obliged to satisfy that judgment, but whether MIB was bound to satisfy any judgment which she obtained. Again, contended Mr Ritchie, the existence and terms of the permitted exception in Article 1(4) of the Second Motor Insurance Directive were irrelevant to the proper construction of the 1999 Agreement. The provisions of that article did not compel an exception to be made of the full width permitted, they just allowed it.
[153] The argument before Judge Seymour was in essence a reprise of the argument before His Honour Judge Tetlow, sitting in Altringham County Court on 18 May 2005 in the case of Sheldon v Goldstraw. A copy of the judgment of Judge Tetlow was put before Judge Seymour. It is also produced as item 10 on the MIB's list of authorities in the present case. It was a brief judgment. After reciting the arguments of Counsel the learned Judge Tetlow expressed his conclusion in this way:-
"The background to the 1999 agreement, which must have been apparent to both contracting parties, was the Directive, which imposed obligations and allowed exceptions. Judged by that background, the common intention must have been that liability to compensate should be excluded where the injured person or the deceased person knew the driver was not insured. The context of the agreement requires the word 'Claimant' to be modified in the particular instance to read: 'Dependant of the deceased' or something to the same effect. In conclusion therefore, I rule that the preliminary issue on the presumed facts should be found in favour of the second defendant, the MIB."
[154] Before Judge Seymour, in Phillips, Mr Ritchie criticised that finding. He submitted that the judge misinterpreted the Second Motor Insurance Directive as requiring, rather than permitting, an exception in respect of the passengers of uninsured drivers who were aware of the lack of insurance. Moreover, contended Mr Ritchie, the learned judge's verbal modification of the wording of the 1999 Agreement did not in fact solve the problem because it did not address the issue of whose knowledge of the lack of insurance was relevant - that of the deceased or that of the dependant.
The Decision of Judge Seymour in Phillips
[155] Lord Justice Ward (in paragraph 14 of his judgment in the case of Phillips) introduced the decision of Judge Seymour as follows:-
"This was the second round of a gladiatorial contest between Mr McKeon for the MIB and Mr Ritchie for dependants of a deceased passenger. They first locked horns in the Altrincham County Court on 18th May 2004 when His Honour Judge Tetlow found for the MIB in Sheldon v Goldstraw. Judge Seymour declined to follow that decision. The nub of his judgment was this:
'30. It seems to me that the basic approach to the construction of any document, in the light of the guidance of Lord Hoffmann to which I have referred, is to look at what it actually says. That must be the logical starting point. While a document must be construed against the background of the relevant circumstances in which it was made, one should not start from the position that the answer to the proper construction of the document lies in the background circumstances and that little or no account need be taken of the wording of the document. Moreover, as it seems to me, where the relevant words of a document appear on their face to have a clear and unambiguous meaning that is a powerful aid to their construction. There must be a certain weight to be attached to the consideration that the parties meant what they appear clearly to have said. In the present case the wording of the definition of the expression "claimant" is clear and is to the effect for which Mr Ritchie contended.
31. I accept that the wording of the definition was introduced by the expression "unless the context otherwise requires". One would ordinarily expect that the contingency against which parties were seeking to guard by including some such wording was a situation in which the application of the literal definition produced absurdity or something approaching it. Mr McKeon seemed at one point rather to be submitting that the effect of the words was a somewhat Alice in Wonderland licence to the parties to interpret their definitions as they chose depending upon the result they wanted to achieve. I cannot accept that submission.
32. It is obviously right, in my judgment, in construing the 1999 Agreement, to have in mind that it is the successor to a number of other agreements between essentially the same parties and dealing with the same subject matter. However, that does not lead to the conclusion, in my judgment, that the parties to the 1999 Agreement wished to achieve in respect of passengers injured by uninsured drivers who had knowledge of the lack of insurance the same provision as that made in the 1988 Agreement. The obvious course to take had that been desired would have been simply to repeat the relevant provisions of the 1988 Agreement. The use of different wording shows plainly, as it seems to me, that it was not intended simply to reproduce the same effect as in the 1988 Agreement. The wording in the 1988 Agreement was clear as to the effect upon the claims of dependants. The changing of that clear wording, in my judgment, shows that, for whatever reason, the parties to the 1999 Agreement wished to make different provision. The different provision made, as it seems to me, not visiting the consequences which would have ensued for a person in the position of Mr Phillips had he been the claimant upon his dependants, is not absurd or ridiculous. There could be very sound reasons of policy for wishing to achieve exactly that result.
33. I accept the submission of Mr Ritchie that it is irrelevant to the proper construction of the 1999 Agreement that the necessary basis for a claim under Fatal Accidents Act 1976 s.1 is that the deceased, had he lived, would have had a claim. So far as the 1999 Agreement is concerned, the sole issue is whether the actual claimant, Mrs Phillips, satisfies the requirements of the 1999 Agreement, properly construed, which need to be met before she is entitled to have her judgment, assuming she gets one, against Mr Rafiq satisfied by MIB. In my judgment, for the reasons which I have given, she does.
34. For the reasons submitted by Mr Ritchie I find that the provisions of Article 1(4) of the Second Motor Insurance Directive are also irrelevant to the proper construction of the 1999 Agreement. Those provisions do not require any exception at all to be made under a scheme like that established by the 1999 Agreement. They simply prescribe the greatest extent of the permitted exception.'"
[156] In the result, Judge Seymour decided that the answer to the issue posed was that the MIB was liable to satisfy any judgment obtained by Mrs Phillips against Mr Rafiq and there was to be a declaration to that effect.
[157] However, the MIB appealed against the decision of Judge Seymour.
[158] I turn now to the decision of the Court of Appeal.
The Decision of the Court of Appeal in Phillips
[159] The Decision of the Court of Appeal (Civil Division) in the case of Phillips is reported at [2007] EWCA Civ 74.
[160] The Appeal was heard before The Rt Hon. Lord Justice Ward, The Rt Hon. Lord Justice Latham and The Hon Mr Justice Charles.
[161] Lord Justice Ward gave the following introduction in paragraph 1 of the judgment:-
"The issue in this appeal is this: is the appellant, the Motor Insurers' Bureau ('M.I.B') liable upon the proper construction of the Uninsured Drivers Agreement of 1999 to satisfy any judgment obtained against the first defendant in this action brought by Mrs Louise Phillips, the widow of the late Neville Phillips, on her behalf and on behalf of his dependents, for damages under the Fatal Accidents Act 1976 in circumstances where the deceased was killed in a road traffic accident and where he knew that he was being carried as a passenger in the vehicle concerned when it was being used without there being in force in relation to its use such a contract of insurance as would comply with Part VI of the Road Traffic Act 1988. This is the M.I.B's appeal against the declaration made on 11th May 2006 by His Honour Judge Seymour Q.C. sitting as an additional judge of the Queen's Bench Division that the Bureau is so liable."
[162] I have already outlined above the main features of "The background facts" (paragraphs 2 to 7 of the Court of Appeal judgment), "The interpretation of contracts: the modern principles" (paragraphs 8 and 9), "The MIB scheme for compensation of victims of uninsured drivers" (paragraph 10 to 13) and "The judgment under appeal" (paragraphs 14).
[163] In relation to the Second Directive of 30 November 1983 (84/5/EEC) (quoted above) Lord Justice Ward said this (at paragraph 12):-
"12. We were referred to White v White [2001] 2 A.E.R. 43 where the House of Lords had to interpret the exclusion clause in the 1988 Agreement in the light of this Directive. I do not gain much assistance from this authority. The factual issue was quite different: in essence the issue was whether the passenger knew or ought to have known that the driver of the vehicle was not insured if he was merely careless or negligent, giving no thought to the question of insurance even though an ordinary prudent passenger, in his position and with his knowledge, would have made enquiries. ...
Whilst, therefore, the Directive is obviously part of the relevant background, this aspect of it and the decision in White v White hardly throws much light on the controversy we have to resolve."
[164] Lord Justice Ward continued (at paragraph 13 - and again I summarise) as follows:-
"13. More to the point are the terms of the 1988 Agreement and the extent to which the 1999 Agreement differs from it. I must, therefore, examine those differences, though not exhaustively. These are the major points:
(1) The 1988 Agreement defines 'contract of insurance', 'insurer', and 'relevant liability' in terms not dissimilar to the definitions contained in the 1999 Agreement. What is significant about clause 1 is that the 1999 Agreement expands the number of definitions and, importantly, defines 'claimant' as I have already set out. Mr Worthington Q.C. who appears for the appellant, though he did not appear below, emphasises that in the 1999 Agreement the definitions apply 'unless the context otherwise requires'. He submits 'claimant' is used in the procedural sense, that is to say a party to a proceedings. I agree. That is borne out by the 'Notes for the guidance of victims of road traffic accidents' annexed to the Agreement and expressed to be 'some notes on its scope and purpose'. ...
(2) The language of clause 2 of the 1988 Agreement - 'Satisfaction of claims by M.I.B.' - and clause 5 of the 1999 Agreement - 'M.I.B's obligation to satisfy compensation claims' is different but the effect is the same. This recites the basic obligation undertaken by the M.I.B. to satisfy any judgment obtained against a person whose use of the vehicle was not insured.
(3) This case concerns the exceptions to the Agreement and here the difference is marked and, therefore, important. Clause 6.1 of the 1988 Agreement is in these terms (quoted by Lord Justice Ward - and summarised above).
(4) Compare that with Clause 6 of the 1999 Agreement (quoted by Lord Justice Ward - and summarised above). ... The crucial differences in the language of clause 6.1(e) of the two Agreements will need to be considered further.
(5) Both Agreements contain conditions precedent to the M.I.B's liability. They are not in the same terms but the differences do not appear to me to be material. Clause 9 of the 1999 Agreement requires notice of the relevant proceedings to be given and clause 10 requires notice of the service of the proceedings to be given. Clause 11 requires a further notice to be given of, for example the filing of a defence. Clause 12 requires notice to be given of an intention to apply for judgment. These are new. Previously information had to be given if it was sought: now the requirements are elevated to conditions precedent.
(6) The notes for the guidance of victims include these observations (Lord Justice Ward quotes from paragraph 1.1 and paragraph 3 of the guidance notes which have already been set out above):
[165] The core of Lord Justice Ward's decision is to be found in paragraphs 15 to 26 of his judgment. In particular, under the heading of "Discussion", Lord Justice Ward said, inter alia:-
"15. Relying on Lord Steyn's opinion set out above, Mr Worthington submits that the judge erred in starting his consideration with the literal meaning and in not first having regard to the background to assist in establishing the true meaning. He submits he erred in requiring some absurdity or ambiguity to be shown before resorting to a contextual, purposive construction. In my view it would be unfair to the judge to uphold that criticism. This was an ex tempore judgment and as such should not be subjected to close textual analysis. Read as a whole I am quite satisfied that the judge plainly did take account of the relevant background and purpose of this Agreement. In any event, it seems to me that, since permission to appeal has been granted, we must now decide for ourselves. After all interpretation is a question of law or, perhaps more accurately given the need to construe the agreement against the relevant background, a question of mixed law and fact. As the facts are not in dispute, we are as well equipped to construe the Agreement as the learned judge was.
16. The background to any scheme for the compensation of the victims of uninsured drivers must include the range of victims objectively likely to be within the contemplation of the contracting parties. Victims of motor accidents may be those who suffer damage to their property, many of course are those who are injured and sadly, some are killed. Victims will necessarily include not only those who survive but also their dependents who suffer the loss of income derived from the deceased. All of these victims would reasonably be within the contemplation of the contracting parties.
17. This claim for loss of income after the death of the deceased was brought by Mrs Phillips for herself and for the dependents under the Fatal Accidents Act 1976. S. 1 provides as follows:
'(1) If death is caused by any wrongful act, neglect or default which is such as would (if death had not ensued) have entitled the person injured to maintain an action and recover damages in respect thereof, the person who would have been liable if death had not ensued shall be liable to an action for damages, notwithstanding the death of the person injured.
(2) Subject to section 1A(2) below, every such action shall be for the benefit of the dependents of the person ('the deceased') whose death has been so caused.'
This statutory provision makes it clear that the claim of the dependents is separate and distinct from the claim which survives for the benefit of the estate pursuant to the Law Reform (Miscellaneous Provisions) Act 1934 which is in these terms:
'(1) Subject to the provisions of this section, on the death of any person after the commencement of this Act all causes of action ... vested in him shall survive ... for the benefit of his estate.'
This distinction is well known and must have been in the minds of the draughtsmen of the M.I.B. Agreement. The Fatal Accidents Act itself does not deal with enforcement or satisfaction of any judgment obtained under it and the Act cannot, therefore, have much more bearing on the proper meaning to be given to clause 6.1(e).
18. The second Council Directive (84/5/EEC) is, as I have mentioned, also obviously relevant. The Agreement must be assumed to have been drafted in a way which is compliant with the Directive. One can, therefore, fairly say that the main purpose of the Agreement if it is to accord with the preamble must be 'to guarantee that the victim will not remain without compensation'. But certain limited exclusions as regards the payment of compensation are permitted. The Directive is vague as to who the victim is but, in my view correctly, it was not argued that the derivative claim under the Fatal Accidents Act of dependants who suffer loss as the result of the death of a passenger in an uninsured motor car was outside the underlying purpose of the Directive. Rather, and again in my view correctly, the common ground before us was that the exclusion of such a derivative claim is permissible when the passenger has the knowledge referred to in the relevant power of exclusion in the Directive, namely:
'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.'
But the ability to exclude both a claim by such a passenger, and his dependents, as was done in the 1988 Agreement, does not in my view indicate whether that power has been exercised again by the 1999 Agreement.
19. The 1988 Agreement is obviously relevant to the background to the construction of the 1999 Agreement. The material terms of the 1988 Agreement admit of no difficulty in construction. Had it still applied to this claim, then the claimant would not have been able to obtain satisfaction from the M.I.B. because under clause 6.1(e) of that Agreement 'the person suffering death', the late Mr Phillips, 'was allowing himself to be carried in or upon the vehicle' knowing its use was uninsured. The language is plain and the meaning is obvious. Yet the stark fact is that that formula was not adopted in 1999.
20. Mr Worthington's comparative analysis of the 1988 and 1999 Agreements draws attention to the expansion of the conditions precedent in 1999 to justify the submission that, objectively considered, the 1999 Agreement was tighter than the 1988 Agreement and was certainly not more 'liberal'. That may be and probably is so. But that cannot explain why the language in clause 6.1(e) is so utterly different. It is not as if the draughtsman had lost sight of the words in the 1988 version of clause 6.1(e) 'the person suffering death or bodily injury or damage to property' because similar words are used to create what was in my view correctly accepted to be a wholly different exclusion that did not apply in this case in clause 6.1(c) for the 'beneficiary'. Why, one asks rhetorically, were those words not carried forward into clause 6.1(e) in 1999 when they had such an important place in the structure of the exclusions in 1988?
21. Mr Worthington relies, of course, on the flexibility of the new definitions in 1999 because 'claimant' means the person who commences the proceedings unless the context otherwise requires. In considering what that means, another issue of construction may possibly arise in that the words 'in this Agreement, unless the context otherwise requires' may be ambiguous. The context may mean, as Mr Worthington contends it does, the context in which the Agreement is made, in other words, the whole background or the matrix of fact. It may, however, be that the relevant context is the context in the Agreement itself, in other words the context in which the word is used from time to time and place to place in the Agreement. For my part this does not seem to matter much. The word 'claimant' must of course be looked at in the context of the sentence or paragraph in the Agreement in which it is placed to see how it fits in with the Agreement read as a whole. Mr Worthington's construction seems to me in this case to amount to no more than an express reminder to apply the principles of construction set out by Lord Hoffmann. Both exercises always have to be undertaken. In the narrow context of clause 6 nothing leaps from the page which would force the reasonable reader to conclude that 'claimant' there meant something different from the meaning of 'claimant' as given in clause 1. In both exercises a significant weakness of Mr Worthington's argument is that he cannot easily supply the alternative definition for 'claimant' in respect of a claim under the Fatal Accidents Act . He suggests 'deceased'. Simply to substitute 'deceased' for 'claimant' in clause 6.1(e) in all cases would lead to the absurd result that the injured passenger who survives is not excluded from the scheme even if he had guilty knowledge. The substitution of one word for another does not work. Also that simple substitution does not work in a claim under the Fatal Accidents Act because the deceased is not the person making the claim. It follows that what Mr Worthington seeks can only be achieved by the wholesale rewriting of clause 6.1(e) if it is to cover claims by a passenger with guilty knowledge who survives and a claim under the Fatal Accidents Act on behalf of the dependents of such a passenger if he dies.
22. In a teleological construction, the search is for a clear understanding of the underlying purpose in order to give effect to it. The document itself gives some indication of where to search. It begins as follows:
'13th August (1999)
Motor Insurers' Bureau
(COMPENSATION OF VICTIMS OF UNINSURED DRIVERS)
The Text of an Agreement dated 13th August 1999 between the Secretary of State for the Environment, Transport and the Regions and Motor Insurers' Bureau together with some notes on its scope and purpose.'
Those notes throw some light on the purpose because paragraph 1.1 tells us:
'The role of M.I.B. under this Agreement is to provide a safety net for innocent victims of drivers who have been identified but are uninsured.'
That is achieved by clause 5 but, as I have already said, it cannot serve further to elucidate who is within the contemplated range of victim. On the face of it the dependent is as much a victim as the deceased himself is.
23. Paragraph 3 of the notes is relied on by Mr Worthington. This deals with the 'claims which M.I.B. is not obliged to satisfy' and includes:
'3.6 A claim made by a passenger in a vehicle where the loss or damage has been caused by the user of the vehicle if:-
3.6.1 use of the vehicle was not covered by a contract of insurance; and
3.6.2 the claimant knew or could be taken to have known that the vehicle was being used without insurance ...'
Mr Worthington submits that the word 'passenger' in 3.6 is used synonymously with 'claimant' in 3.6.2. I see the force of the argument but I do not accept that this explanatory note can override the Agreement itself so as to lead to the substitution of 'passenger' for 'claimant' in clause 6.1(e).
24. Mr Worthington also submits that the contracting parties could not objectively have intended to encourage uninsured use. I cannot see that the Agreement provides any such encouragement. As it says, it provides a scheme for compensation of victims of uninsured drivers. That purpose is achieved if the dependents are seen as victims. The appellant submits it is absurd to compensate the dependents but refuse compensation to the passenger who survives badly injured with a massive claim for loss of future earnings. That may be an anomalous result but as the judge held, 'There could be very sound reasons of policy for wishing to achieve exactly that result.' We simply do not know and, looked at objectively, cannot exclude a deliberate extension of protection so as to bring dependents within the umbrella of compensation. If it was thought right to indemnify dependents, then the insurers' who entered into this Agreement must also have accepted that law abiding drivers would have to fund this additional burden.
25. Finally, it cannot be immaterial that this is not an Agreement made between two legally unsophisticated parties who were using their best but incompetent endeavours to reduce to writing an oral understanding which they had reached. This, on the contrary, is an Agreement between the Secretary of State on the one hand and the M.I.B. on the other. And so, looked at objectively, the teams who drafted this Agreement must be held to have a high level of knowledge of the working of the scheme in the past and of expertise over the subject matter of it. As Lord Hoffmann said, commonsense suggests that in those circumstances parties of that kind do not make flagrant linguistic mistakes in formal documents as important as this. The 1988 Agreement clearly excludes a claim of the kind brought in this action: the 1999 Agreement when construed literally, clearly included it. Nothing in the background would drive a reasonable man to conclude that the words mean something quite different from what they so plainly and obviously literally mean. A reasonable man could not confidently say that the purpose of this Agreement is to exclude a dependent's claim. In those circumstances, the literal meaning must prevail.
26. For those reasons I am satisfied that the judge was correct in his interpretation and in the declaration he made. I would dismiss this appeal."
[166] Lord Justice Latham agreed with Lord Justice Ward (paragraph 27).
[167] Mr Justice Charles also agreed (paragraph 28).
The Submissions for the Parties in the present case
[168] I have set out the arguments advanced in the case of Phillips in considerable detail (above) because, it would be fair to say, they reflect essentially the same arguments that were relied upon in the present case by the pursuer and by the second defenders.
[169] Having done so, I need not rehearse and repeat the competing submissions of counsel in further detail.
[170] However, as indicated earlier, the MIB also advanced certain additional arguments before me - which I propose to record and address as follows.
Additional Arguments for the MIB
[171] Counsel for the MIB did not shrink from the proposition that the decision of the Court of Appeal in Phillips was entirely in point - but it was "wrong".
[172] In overview, the main arguments for the MIB might be distilled down to the following inter-related submissions.
1. Absurdity
[173] It was submitted that, when seen in context, "claimant" in the 1999 Agreement must mean the person in respect of whose death the claim is brought. The pursuer's construction makes no sense at all and involves absurdity. On the pursuer's argument, a distinction is being drawn between three separate classes of persons, namely:-
(1) a bereaved person who was ignorant of the lack of insurance - who would be entitled to recover;
(2) a bereaved person who knew of the lack of insurance but who was not in the car at the time of the accident - who would be entitled to recover; and
(3) a bereaved person who knew of the lack of insurance and who was travelling in the car at the time of the accident - who, on the pursuer's construction, would not be entitled to recover.
There was no logical basis for a distinction between the last two categories - (2) and (3). The pursuer's construction was "absurd" or at least "something has gone wrong with the language" - so submitted counsel for the MIB. Lord Justice Ward in Phillips did not take that anomaly into account and was wrong to ignore it.
2. Context and Fatal Claim
[174] The context includes the fact that this is fatal claim - and a Scottish one. In a fatal claim "claimant" means the person in respect of whose death the claim proceeds. The principle from McKay v Scottish Airways 1948 SC 254 (at 264) applies. In Scots law it has always been the case that a plea that can be taken against the deceased can be taken against a relative. The relatives can never recover unless the deceased, had he lived, could have done so. Mr Dunlop also mentioned Jameson and another v Central Electricity Generating Board [2000] 1 A.C. 455 as being a recent instance of the House of Lords applying that principle. The same rule applies north and south of the border but there is no mention of it in Phillips. Lord Justice Ward did not consider matters in the correct context - bearing in mind that this was a fatal claim where the McKay principle applied.
3. EC Directive
[175] The context to be considered also includes the Second EC Directive. It was that Directive which gave rise to the need for a new Agreement in 1999 and it was mentioned in the evidence of Mr Snook. The MIB's interpretation is consistent and compliant with the Directive. The pursuer's interpretation is not - or at least less so. On a proper reading the exclusion/exception permitted by the Directive looks to the knowledge of the injured person/deceased and not to the knowledge of some other person (such as a relative) uninjured in the accident. In the exclusion "they" (in the phrase "they knew it was uninsured" - at page 3.5 of Production 29/5) refers to the injured party / deceased. Lord Justice Ward went wrong in his approach to the Directive in Phillips (in paragraph 18).
4. Mr Snook's Evidence
[175] The use of the word "claimant" has to be seen in the context of Mr Snook's evidence , the Woolf reforms and the desire to use the same terminology as used in the English Civil Procedure Rules. The evidence of Mr Snook provides an answer to the rhetorical question posed by Lord Justice Ward in Phillips (in paragraph 20).
[176] The words "unless the context otherwise requires" in Clause 1 of the 1999 Agreement are broad and flexible enough to have the result contended for by the MIB. In Phillips, Lord Justice Ward erred in relation to context (in paragraph 20).
5. Notes for Guidance
[177] Lord Justice Ward was correct to "see the force of the argument" for the MIB based on the Notes for Guidance appended to the 1999 Agreement. However, he failed to accept that it lead to the substitution of "passenger" for "claimant" in Clause 6.1(c). That was an error (in paragraph 23).
6. Literal Construction
[178] Literalism should be resisted in the interpretive process. The literal construction favoured by Lord Justice Ward was wrong (in paragraph 25).
[179] In the result, the mere change of words between the 1988 Agreement and the 1999 Agreement does not demonstrate that any change of meaning was intended.
[180] There was no sound reason of policy for a change of meaning - and the pursuer's interpretation gave rise to anomalies and a number of questions.
[181] Why would the parties to the 1988 Agreement agree to a change in the 1999 Agreement? In particular:-
(1) Why would the MIB or insurance industry agree give away a valuable exemption which they had enjoyed for years and which is expressly recognised in the Second EC Directive?
(2) Why would the parties to the Agreement choose to derogate from the rule that has always been part of our law that relatives cannot recover if the deceased could not?
(3) Why would they agree to derogate on the basis of a meaningless distinction dependent on whether or not a relative was travelling in the car at the time of the accident?
[182] Why distinguish between a relative on a pavement and a relative in a car?
[183] The case of Sheldon may not have provided all the answers but it did arrive at the right result.
[184] Claimant, in the context of this case, means "the person in respect of whose death the action proceeds".
[185] Accordingly, declarator should be refused and the second defenders should be assoilzied.
[186] So submitted counsel for the MIB.
Discussion
[187] The issue before me depends upon the proper construction of the 1999 MIB Agreement (Production No. 29/1).
[188] I have already set out in some details all the relevant factors which were referred to in the submissions of counsel. I have had regard to all those submissions.
[189] At the centre of those submissions lies the case of Louise Jestina Phillips (as representative of the estate of Neville Britton Phillips deceased) v Mohammed Rafiq and Motor Insurers Bureau which is reported firstly at [2006] EWHC 1461 (QB) and, on appeal, at [2007] EWCA Civ 74 ("the case of Phillips").
[190] At first instance, in Phillips His Honour Judge Seymour may have been unduly harsh when he used the words "Alice in Wonderland" in relation to the MIB's submissions (in paragraph 31 of his judgment). He also went too far when he said that certain factors such as the Second EC Directive were "irrelevant" (in paragraph 34). However, in my view, the same cannot be said of the decision of the Court of Appeal.
[191] In my opinion, the judgment of Lord Justice Ward in Phillips is measured, comprehensive and entirely correct.
[192] I can find no material error - nor any ground for distinction.
[193] In short, I agree with the Court of Appeal.
[194] I do not accept that the word "claimant" in the 1999 Agreement, when seen in context, has the meaning contended for by the MIB.
[195] The claimant, in this context, is the pursuer - Anne Louise Tiffney.
[196] I can find nothing wrong or absurd with that conclusion.
[197] It can fairly be said that the main purpose of the MIB Agreement is "to guarantee that the victim will not remain without compensation".
[198] That appears from the second EC Directive (on page 2 of No 29/5).
[199] I can see no basis for concluding, as a matter of policy or otherwise, that the pursuer's claim in the present action falls outwith that underlying purpose.
[200] Clearly this is a fatal claim - but on the face of it, Anne Tiffney is a victim.
[201] In that regard, I agree with Lord Justice Ward (at paragraphs 18 and 22).
[202] I also agree with Lord Justice Ward (in paragraphs 19) that having regard to the 1988 Agreement "the stark fact is that that formula was not adopted in 1999". The language used in the 1999 Agreement in clause 6.1(e) is "utterly different" from the 1988 Agreement (paragraph 20).
[203] There may well be anomalies in the 1999 Agreement but they do not produce the result contended for by the MIB.
[204] The clear change of wording between the 1988 Agreement (which refers to "the person suffering death" in Clause 6.1(e)) and the 1999 Agreement (which refers to "claimant" in Clause 6.1(e)) re-enforces the conclusion reached by the Court of Appeal in Phillips.
[205] The MIB found upon the dictum of Lord President Cooper in McKay v Scottish Airways 1948 SC 254 (at 264) to the effect:- "that the relative can never recover unless the deceased, had he lived, could have done so".
[206] That may well be true as a general proposition (at least in certain situations) but the fact remains that, in the present case, the deceased (had he lived) could have recovered from the first defender (assuming the first defender was able to satisfy the judgment). Indeed it is a matter of admission that the accident was caused by fault and negligence on the part of the first defender. That is the context in which the McKay dictum has meaning. There is nothing to suggest that Lord President Cooper had in mind the different question of liability under an MIB Agreement. Quite the reverse. In my opinion, if the MIB took comfort from the case of McKay (or the English equivalent) when the terms of the 1988 Agreement were being changed to the different terms of the 1999 Agreement they were wrong to do so.
[207] The laws of Scotland and England do not seem to be materially different for present purposes. It would be difficult to justify different outcomes north and south of the border.
[208] In any event, in the present case the pursuer, Anne Tiffney, sues as an individual rather than as executrix on behalf of her son's estate. On one view, her arguments are a fortiori of those based on a more "derivative" claim.
[209] In relation to the Second EC Directive the debate focussed mainly on the Article 1.4 (page 3 of 29/5 of Process) which provides inter alia:-
"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".
In my opinion, the word "they" refers back to "persons who voluntarily entered the vehicle". I agree with Lord Justice Ward when he said (in paragraph 18) that:- "the ability to exclude ... a claim ... as was done in the 1988 Agreement, does not ... indicate whether that power has been exercised again by the 1999Agreement" (paragraph 18). The relevant provisions are permissive not mandatory.
[210] In my view, the phrase "unless the context otherwise requires" in Clause 1 of the 1999 Agreement does not produce the result contended for by the MIB - even taking into account the evidence of Mr Snook and the Woolf reforms.
[211] I did not find the evidence of Mr Snook particularly helpful in relation to the issue before me. His evidence does not cause me to disagree with the Court of Appeal in Phillips. Nor does it demonstrate any material error.
[212] In relation to the "Notes for Guidance" appended to the 1999 Agreement I can detect no error in the approach taken by Lord Justice Ward. As he said (in paragraph 22):- "I do not accept that this explanatory note can override the Agreement itself so as to lead to the substitution of 'passenger' for 'claimant' in clause 6.1(e)". Support for that conclusion can be found in the notes themselves - in the introductory paragraph (on page 11 of Production 29).
[213] In summary, in paragraph 24, 25 and 26, Lord Justice Ward said inter alia:-
"(The 1999 Agreement) provides a scheme for compensation of victims of uninsured drivers. That purpose is achieved if the dependents are seen as victims. ... The 1988 Agreement clearly excludes a claim of the kind brought in this action: the 1999 Agreement when construed literally, clearly included it. Nothing in the background would drive a reasonable man to conclude that the words mean something quite different from what they so plainly and obviously literally mean. A reasonable man could not confidently say that the purpose of this Agreement is to exclude a dependent's claim. In those circumstances, the literal meaning must prevail. ... For those reasons I am satisfied that the judge was correct in his interpretation and in the declaration he made."
[214] I agree with those comments. Phillips provides powerful support for the pursuer's position - and the contrast between the 1988 Agreement and the 1999 Agreement.
[215] I was not persuaded by the MIB's argument based on posing questions such as: "Why would the MIB or insurance industry agree give away a valuable exemption?".
[216] A more appropriate question might be: "On a proper construction, and having regard to all the relevant circumstances, did the MIB and insurance industry give away a valuable exemption - to the benefit of victims such as the pursuer?".
[217] The answer to that second question, in my view, is "Yes".
[218] In effect, in my view, the MIB are inviting the court to re-write the 1999 Agreement and to substitute the 1988 wording. I cannot do that.
[219] I am not persuaded by the MIB's argument that the words changed in 1999 - but not the meaning.
[220] In the result, having heard the evidence of Mr Snook and having regard to all the submissions of counsel, I have reached the same conclusion as the Court of Appeal in Phillips.
[221] In my opinion, on a proper construction of the 1999 Agreement and bearing in mind the background context, the pursuer (and claimant) in the present case is entitled to the declarator which she seeks.
Decision
[222] In the whole circumstances, and for the reasons outlined above, I am satisfied that the pursuer's submissions fall to be preferred.
[223] I agree with the conclusions of the Court of Appeal in England and Wales in the case of Phillips.
[224] I am not satisfied that Phillips can be distinguished.
[225] I was not persuaded by any of the additional arguments presented on behalf of the MIB before me.
[226] I shall therefor grant the declarator sought by the pursuer in terms of the second conclusion of the summons.
[227] I shall continue the cause on the question of expenses.
[228] I shall also put the case out "By Order" in respect of further procedure.
[229] At that stage, when all parties are present, I will pronounce a formal interlocutor dealing with the pursuer's motion to find liability established against the first defender (without any deduction in respect of contributory negligence) and thereafter to allow parties a proof restricted to quantum.