Untraced driver claims to rise after Court of Appeal strikes down MIB agreement

The Motor Insurance Bureau could face thousands of claims for compensation in cases involving untraced drivers after a Court of Appeal ruling that children victim of hit-and-run drivers should be able to bring late claims for compensation in the same way as personal injury claimants in cases involving uninsured drivers (Byrne v Motor Insurance Bureau [2008] EWCA Civ 574).

Ben Byrne was injured in an accident involving an untraced driver in June 1993 when he was three years old but it was not until 2001 that his parents applied to the Motor Insurance Bureau (MIB) for compensation under the 1972 Untraced Drivers Agreement.

The MIB rejected the application, saying that the agreement provides that claims must be brought within three years of an accident '“ in this case, the application should have been made by June 1996.

The Court of Appeal however has found that this cap on the limitation period was unlawful compared with the Uninsured Drivers Agreement which contains no such clause. Following the ruling, children injured in accidents caused by untraced drivers will now be able to apply for compensation up to three years from their 18th birthday.

On paper, this exposes the MIB to claims going back virtually 21 years from the date of the ruling from victims who until now have been time-barred and unable to claim compensation.

These claims, according to Andrew Campbell, a specialist road traffic accident lawyer at Withy King, could reach tens of millions of pounds and will force the MIB to redraft the agreement in line with European legislation.

Clare Burnell, of Higgs & Sons Solicitors, adds that it is difficult to give an exact number but that dormant claims could be in their thousands and that the case will finally allow injured minors to have access to justice.

Byrne's lawyer, Nigel Cragg, of Pinto Potts, says he has already had calls from other personal injury lawyers in similar situations.

Cragg instructed EU expert Nicholas Paines QC, who argued that the MIB's rejection was unlawful under the EU's Second Motor Insurance Directive, which requires EU member states to put in place a system ensuring compensation for victims of uninsured and untraced drivers (Directive 84/5/EEC).

'The MIB's Uninsured Drivers Agreement does not contain a similar provision on limitation', Cragg told Solicitors Journal, so we argued that the refusal to consider the claim amounted to less favourable treatment under the directive and was a breach of the EU principle of equivalence'.

The case was brought directly against the MIB and against the secretary of state on the grounds that Britain had failed to implement the directive properly.

Upholding Mr Justice Flaux's findings at first instance Lord Justice Carnwath said that once it was accepted that it was appropriate to compare the Uninsured Drivers Agreement and the Untraced Drivers Agreement, 'the conclusion seems unavoidable that the Untraced Drivers Agreement gives less favourable treatment'.

Carnwath LJ added that minors and those affected by disability were 'clearly and distinctly disadvantaged by the failure of the MIB scheme to provide equivalent protection, in a way that can drastically affect their substantive rights, as this case shows'.

He concluded: 'I agree with the judge in answering the first preliminary issue. ['¦] In order to meet its intended role as implementing the Second Directive, the MIB agreement should be subject to a limitation period no less favourable than that which applies to the commencement of court proceedings by a minor under section 28 of the Limitation Act 1980'.

Relying on Evans v MIB (Case C-63/01), which raised the question of the lawfulness of the provision in the Untraced Drivers Agreement preventing the recovery of costs and interest on the award, the judge also upheld the lower court's findings that Britain should be held liable for the inadequate implementation of the directive. This failure was sufficiently serious to give rise to en entitlement in damages under the principle established in Francovich.

In addition, in a sharp warning to the secretary of state and to the MIB (see box), Carnwath LJ said the adverse ruling in Evans, although concerned specifically with issues of interest and costs, 'might have been expected to trigger a more active response from the Department'.

The Byrne case is the first time the question has reached the courts but Cragg believes that similar claims have been made which just did not reach the courts as applicants accepted the MIB's point. And according to Campbell, there was an accepted view that the agreement was a private agreement with which the government or courts could not interfere.

The case will now proceed against the government, however the secretary of state has applied for leave to appeal.