A changing landscape: claimant allowed to sue unknown person
Cameron v Hussain and Liverpool Victoria Insurance Co Ltd [23.05.17]
Court of Appeal changes the landscape in cases where the driver/tortfeasor cannot be identified. Permission given to amend the claim to name a person unknown and allow the claim to proceed.
Prior to the decision, the claimant would pursue its claim against the Motor Insurance Bureau (MIB) under the Untraced Driver Agreement (UTDA). However, that is no longer the case.
In Cameron, the claimant had been the victim of a ‘hit and run’ collision but a witness to the incident had been able to record the registration number of the tortfeasor vehicle. This allowed the insurer of the vehicle to be identified through the Motor Insurance Database— which in this case was the second defendant, Liverpool Victoria (LV).
The claimant decided not to pursue her claim against the MIB under the UTDA (which has certain limitations and restrictions, particularly with regard to the recovery of costs). Instead, she decided to pursue her claim in the usual way and have the insurer of the vehicle pay her claim, for both damages and costs.
At first instance, and on appeal, the court determined that the claimant could not amend her pleadings to name the defendant as “the person unknown driving vehicle registration number…”. The claimant appealed to the Court of Appeal.
The Court of Appeal, in a 2-1 majority decision, allowed the claimant’s appeal and confirmed that:
- There is nothing within the Civil Procedure Rules preventing a claimant from suing and obtaining judgment against an “unknown person”.
- The insurer of the vehicle being driven by the “unknown person” would be obliged, pursuant to s.151 of the Road Traffic Act 1988 (RTA 1988), to satisfy any such judgment the claimant obtains.
The Court of Appeal rejected the arguments put forward on behalf of LV that:
- Only in exceptional circumstances should a claimant be permitted to sue an unidentified defendant.
- The policy behind s.151 of RTA 1988 was not to hold insurers liable for claims against unidentified drivers.
- To allow the appeal would give rise to fraudulent claims.
- The claimant had a perfectly satisfactory remedy available to her through the MIB under the UTDA.
What does this mean for insurers in practical terms?
Although not party to the proceedings, this decision clearly creates the possibility of a windfall for the MIB. Where the tortfeasor vehicle has been identified, claimants will no doubt consider it more beneficial to pursue the RTA insurer instead of the MIB.
The extent to which, if any, the MIB will withdraw from any agreement reached to deal with an existing claim is unknown - particularly in circumstances where the claimant now decides to pursue the RTA insurer instead.
In lower value claims, insurers may start to see claim notification form (CNF) submissions with the defendant driver referred to as “unknown”. Previously these may have been rejected as indemnity could not be confirmed but now the insurer has a decision to make.
If they reject the claim, the insurer may still ultimately be liable to satisfy a judgment, which will then cost them more. However, despite the comments of the Court of Appeal, this scenario gives rise to concerns about the potential for fraudulent claims to be submitted. Therefore, accepting the CNF also carries risk.
Is it too cynical to consider:
- The inception of a ghost policy
- An insured who does not exist
- The report on a CNF of a non-existent accident but no opportunity to inspect before the deadline expires, etc..?
It places the insurer in a very difficult position.
What can an insurer do?
- Consider whether or not to pursue a declaration in all cases where it is available. One point that was made clear in the judgment was that the second defendant, LV, had an opportunity to void the policy from inception but chose not to do so. This is entirely understandable (and probably normal practice) given that this was a relatively low value claim. However, this course of action might need to be reconsidered.
- Carefully consider any CNF submission received where the driver is stated to be “unknown”. Quick and thorough investigations will need to be undertaken to determine (i) the weight of the evidence to substantiate that it was the insured vehicle involved (ii) whether or not the driver can be identified and (iii) whether or not declaration proceedings should be pursued.
- If the case proceeds to litigation then closely review the situation regarding service of the pleadings. Whilst this decision dealt with the concept of pursuing an “unknown person” there was no discussion at all as to how service will be affected. It is not difficult to envisage a raft of satellite litigation on the service point.
- Liaise with the MIB in relation to any ongoing cases in which they have already agreed to deal under the UTDA.
At the time of writing, we understand that the second defendant has made an application for permission to appeal to the Supreme Court.
Given that it was a split decision in the Court of Appeal, and the implications of their determination, it can only be hoped that permission is granted.