In extremely positive news for insurers, the Supreme Court has unanimously allowed the appeal of Liverpool Victoria ("LV"), finding a claimant is not entitled to bring a claim against an unnamed driver.
The Court found that it would be impossible to bring the proceedings to the attention of the proposed unnamed Defendant, given that he could not be identified. Service of the claim form could not be effected or properly dispensed with.
The Court held that Miss Cameron could have obtained justice by bringing her claim to the attention of the Motor Insurance Bureau under the Untraced Drivers Agreement (UTDA).
Miss Cameron was involved in a hit-and-run collision with a Nissan Micra. The Micra driver was not identified, but the Claimant traced the registered keeper of the vehicle and an insurance policy. The Claimant issued proceedings against both the keeper of the vehicle (incorrectly believing him to be the driver) and the vehicle's insurers.
The insurer denied liability on the grounds the policy did not cover the registered keeper (Mr Hussain) and the driver had not been identified. The insured could not be traced; it was believed he was fictitious and the policy was fraudulent. LV applied for summary judgment.
The Claimant applied to substitute Mr Hussain to ‘the person unknown driving vehicle registration number Y598 SPS who collided with vehicle …'.
Both the County Court and High Court found the Claimant could submit a claim under the Motor Insurers' Bureau Untraced Drivers Agreement (UTDA).
Surprisingly, the Court of Appeal overturned these decisions and found in favour of Miss Cameron. This extended insurers' liability to injured claimants under Section 151 of the Road Traffic Act to cases where the identity of the driver is unknown, irrespective of whether the policy (in respect of an identified vehicle) covered the driver. In order to avoid this liability, an insurer would have to demonstrate that it was off-cover, or should never have been on-cover by seeking a declaration under section 152(2) of the Road Traffic Act avoiding the policy.
The Court of Appeal decision would have permitted claimants to amend their claim form to substitute as defendant an unnamed driver, identified only by reference to a specific vehicle driven at a specific time and place.
The Supreme Court granted LV permission to appeal the Court of Appeal decision, and has allowed that appeal.
- Lord Sumption distinguished between those anonymous defendants who could be identified but whose names are unknown (giving the example of squatters), and those 'hit and run' drivers, who "are not only anonymous but cannot be identified".
- In the example of squatters, alternative service could be effected under CPR 6.15. However, in this instance, the issue is not only that the unnamed Defendant cannot be found but also that it is not known who he / she is. The problem was "conceptual, and not just practical."
- The Court was not satisfied that service (whether ordinary or alternative) could be expected to reach the unnamed defendant. Furthermore, it was inappropriate to dispense with service of the claim form per CPR 6.16, as the unnamed defendant had not evaded service. It was found that "a person cannot be said to evade service unless, at a minimum, he actually knows that proceedings have been or are likely to be brought against him."
- The Court was not willing to "deny him [the unnamed defendant] an opportunity to be heard simply because it thinks it inherently improbable that he would take advantage of it."
- Miss Cameron and her representatives also advanced the argument that allowing the appeal would be inconsistent with the Motor Insurance Directive. These arguments were dismissed.
What can we learn?
- The decision is very positive news for insurers; had the decision of the Court of Appeal been upheld, this would have led to a dramatic increase costs exposure as it would have provided claimants with a route to litigate against insurers directly in these circumstances.
- The Court of Appeal finding would have resulted in many practical issues for insurers such as whether or not to defend claims against unnamed defendants (who cannot supply their version of events), and also issues of due diligence when issuing policies.
- Claimants will now be required to pursue their claim via the standard route of the UTDA. Lord Sumption held it would have been "quicker and cheaper" for Miss Cameron to claim against the MIB, and remained unclear on why she had pursued this route.
A copy of the judgment can be found here