Moreno v The Motor Insurers’ Bureau [2016] UKSC 52

A UK resident severely injured by an uninsured Greek driver in Greece sued the UK Motor Insurers' Bureau. The Supreme Court held that the scope of compensation must be determined by Greek law, the law of the place of the accident, overruling Jacobs and Bloy.

Facts

On 17 May 2011, Ms Tiffany Moreno, a UK resident on holiday in Greece, was struck from behind by a Greek-registered vehicle driven by Ms Kristina Beqiri, who had no valid driving licence and apparently no insurance. Ms Moreno suffered very serious injuries, including the loss of her right leg, continuing pain, psychological harm, and loss of earnings. She brought a claim against the UK Motor Insurers’ Bureau (‘UK MIB’) pursuant to The Motor Vehicles (Compulsory Insurance) (Information Centre and Compensation Body) Regulations 2003 (SI 2003/37), which transpose successive EU Motor Insurance Directives (culminating in the codified Sixth Directive 2009/103/EC).

The preliminary issue was whether the scope of Ms Moreno’s damages claim against the UK MIB should be measured under English or Greek law. Greek law would yield a lesser measure of compensation than English law in this case (although the position may be reversed in other contexts, such as Irish or Italian law).

Issues

Two central questions arose:

• Whether the EU Directives prescribe any particular approach to the scope or measure of recovery applicable to a claim against a compensation body under article 7 of the Fourth Directive (now article 25(1) of the Sixth Directive);
• Whether, if they do, regulation 13(2)(b) of the 2003 Regulations reflects that approach or instead mandates a different approach (namely, the application of the lex fori, English law).

The Court of Appeal in Jacobs v Motor Insurers’ Bureau [2010] EWCA Civ 1208 and Bloy v Motor Insurers’ Bureau [2013] EWCA Civ 1543 had held that English law governed the measure of compensation under regulation 13(2)(b). The Supreme Court was asked to reconsider that conclusion.

Arguments

Respondent (Ms Moreno)

Mr Beard QC supported the reasoning of the Court of Appeal in Jacobs. He argued that the 2003 Regulations, particularly the wording of regulation 13(2)(b) requiring the UK MIB to compensate ‘as if… the accident had occurred in Great Britain’, provided for English law to govern recovery. He submitted that any anomalies were either capable of resolution or insignificant, and that the domestic legislator could be taken to have adopted a measure of recovery reflecting English law’s treatment of foreign torts at the relevant time. Where English law gave less than the law of the accident state, the victim could make a ‘top-up’ claim against the foreign guarantee fund.

Appellant (UK MIB)

The UK MIB contended that the scope of its liability was governed by Greek law as the law of the place of the accident, consistent with the scheme of the Directives.

Judgment

The Supreme Court (Lord Mance giving the leading judgment, with Lords Clarke, Sumption, Toulson and Hodge agreeing) allowed the UK MIB’s appeal and held that the scope of its liability to Ms Moreno is to be determined in accordance with Greek law.

The Scheme of the Directives

Lord Mance held that the Court of Appeal in Jacobs had looked too narrowly at the Directives. Viewed holistically, the constant aim of the scheme (from the First Directive of 1972 through to the Sixth Directive) has been to improve the prospects and ease with which injured parties recover the compensation to which they are ‘entitled’. The compensation to which a victim is entitled remains the same whichever route to recovery is invoked – whether against the responsible driver, the insurer, the local claims representative, or the compensation body in the victim’s state of residence.

The Court drew support from the predecessor Green Card System, under which bureaux handled claims in conformity with the law of the country of the accident relating to both liability and compensation. Article 1(4) of the Second Directive required each member state’s guarantee fund to apply its own laws to compensation payments – confirming that the law of the state of the accident governed liability and quantum.

Crucially, clauses 7.2 and 8.2 of the Agreement between Compensation Bodies and Guarantee Funds (a precondition to articles 6 and 7 of the Fourth Directive coming into force) expressly required the compensation body to ‘apply, in evaluating liability and assessing compensation, the law of the country in which the accident occurred’. Gilbart J’s dismissal of this as a ‘private agreement’ under-valued its role; it forms part of a consistent scheme that should be construed as a whole.

The reimbursement provisions in articles 6(2) and 7 of the Fourth Directive also pointed strongly in this direction. They envisage full reimbursement from the foreign compensation body or guarantee fund to the local compensation body that paid the victim. The Jacobs analysis would create mismatches: the local compensation body might pay more (or less) under its own law than it could recover by way of reimbursement or subrogation, undermining the coherence of the scheme.

Regulation 13(2)(b)

Turning to the domestic Regulations, Lord Mance accepted that Jacobs was correct in identifying the basic rationale of the ‘as if… the accident had occurred in Great Britain’ wording: to extend the UK MIB’s role from accidents in Great Britain to foreign accidents, mirroring its functions as guarantee fund. But the Court of Appeal was wrong to attribute to this language any further purpose, in particular by treating it as importing English law as the lex fori on quantum.

Regulation 13(2)(b) should be read as having a ‘purely mechanical or functional operation’. The Court of Appeal had wrongly drawn on the old common law distinction between liability and heads of damage (governed by the lex loci delicti) and measure of compensation (governed by the lex fori) recognised in Harding v Wealands [2007] 2 AC 1 – a distinction since removed by Rome II (see Cox v Ergo Versicherung AG [2014] UKSC 22).

Regulation 12(4)(b) presented more difficulty given its express reference to recovery ‘under the laws applying in that part of the United Kingdom in which the injured party resided’. Lord Mance suggested this provision was most likely directed at determining which of the United Kingdom’s three legal systems should apply, rather than prescribing the substantive measure of recovery; alternatively, it could be read as embracing the conflict of laws rules of that part of the UK, which would normally point (via Rome II) to the law of the state of the accident.

Disposal

The Court held that the position under EU law was sufficiently clear that no reference to the Court of Justice was required. Jacobs and Bloy were overruled in relation to the meaning of regulation 13(2)(b). The UK MIB’s appeal was allowed.

Implications

The decision establishes that, in claims by UK-resident victims of foreign motor accidents against the UK MIB as compensation body under regulation 13 of the 2003 Regulations, the scope and measure of compensation is determined by the law of the place of the accident, not English law. This reverses what had been understood since Jacobs in 2010.

The principle is firmly rooted in the coherent operation of the EU Motor Insurance Directive scheme: a victim’s entitlement should be measured on a consistent basis regardless of the route chosen for recovery, and the reimbursement and subrogation provisions only function properly if this is so. The decision aligns the position with Rome II, which generally directs application of the law of the place of the accident.

The practical significance is substantial for claimants and their advisers. Some UK claimants will recover less than under English law (as in Ms Moreno’s case under Greek law), while others – for example claimants whose accidents occurred in Ireland or Italy – may recover more. Practitioners pursuing the UK MIB for foreign accidents must now plead and prove the relevant foreign law as the measure of compensation.

Lord Mance also expressly noted that, with the United Kingdom’s exit from the European Union, the arrangements would be among those requiring further thought. The decision is limited to interpretation of the Directives and the 2003 Regulations as they then stood, and does not address what regime might apply post-Brexit. It also leaves open some questions about the precise operation of regulation 12(4)(b), although Lord Mance’s preferred reading aligns it with the Directives’ scheme.

Verdict: Appeal allowed. The scope of the UK Motor Insurers’ Bureau’s liability to Ms Moreno is to be determined in accordance with the law of Greece. The decisions in Jacobs v Motor Insurers’ Bureau [2010] EWCA Civ 1208 and Bloy v Motor Insurers’ Bureau [2013] EWCA Civ 1543 are overruled in relation to the meaning of regulation 13(2)(b) of the 2003 Regulations.

Source: Moreno v The Motor Insurers' Bureau [2016] UKSC 52