Kelec v (1) Kotwal (2) Nelson Insurance (HHJ Dight CBE, central London County Court, 18 August 2022).
Cressida Mawdesley-Thomas successfully acted for Nelson Insurance at first instance and on appeal, instructed by Olivia Unsworth of Canford Law. The case concerned the limits of a direct action under The European Communities (Rights against Insurers) Regulations 2002 (‘the 2002 Regulations’). Below is a blog discussing the nature of an action under regulation 3 of the 2002 Regulations versus an insurer’s obligation to satisfy a judgment under section 151 of the Road Traffic Act 1988 (‘RTA 1988’).
The case arose out of a modest road traffic accident that happened in June 2019. The claimant relied on regulation 3 of the 2002 Regulations. At trial before District Judge Hussain the Claimant was unable to say in cross-examination who was the tortfeasor driver. There was neither written nor oral evidence from the First Defendant and the Defence denied that the Second Defendant issued a policy of insurance covering the First Defendant to drive the vehicle in question. It was not the Claimant’s case that the First Defendant, whoever he might be must have been insured under a policy of insurance issued by the Second Defendant. Accordingly, the claimant failed to prove that the First Defendant was an insured person and that the second Defendant was liable to him, as required by regulation 3 of the 2002 Regulations.
It was held at first instance by Judge Hussain (and upheld on appeal by HHJ Dight CBE):
“12. I find that the European Communities (Rights against Insurers) Regulations enable the victim of a driver to, as an alternative to obtaining judgment against the driver and then seeking to enforce such judgment against the insurers under section 151 of the Road Traffic Act, instead proceed directly against the driver’s insurers.
13. In such proceedings, a victim steps into the shoes of the driver in accordance with regulation 2(3) of the 2002 regulations. However, any defence which the insurers have against the driver will prevail against the victim. This is because Regulation 3 is qualified by the words “to the extent he is liable to the insured person”.
Accordingly, as the claimant could not prove that the Second Defendant was liable to the First Defendant the claim fell to be dismissed as the Claimant had not proven his case as formulated within the statement of case.
Claims under the 2002 Regulations
There are 4 requirements to bring a direct claim under regulation 3 of the 2002 Regulations:
- The victim is an entitled party (i.e., a resident of a EU member state or a state which is a contracting party to the EEA agreement);
- The entitled party has a cause of action against an insured person in tort (an insured person will include someone who is permitted to drive the vehicle in question under the vehicle’s policy or who was driving the vehicle under their own driving other vehicles policy extension);
- The cause of action arises out of an accident; and
- The accident was caused by or arose out of the use of a vehicle on a road or other public
place in the UK.1
It was argued in Roadpeace v Secretary of State for Transport  EWHC 2725 (Admin) that the qualification in regulation 3 imposed by the words “to the extent he is liable to the insured person” did not comply with EU law, Ouseley J did not agree and held as follows in his judgment at : “It would be a strange result if exclusions or grounds for avoiding the contract which could not be raised as against the third party in proceedings against the insured, could nonetheless be raised in direct proceedings against the insurer.”
Comment: Regulation 3 vs section 151
The 2002 Regulations enable an entitled party to bring a direct right of action against the insurer of an insured person. This is an important cause of action as it means that it might be possible to bring a claim against the insurer of an unnamed driver if, for example it can be established that whoever the tortfeaser driver was s/he must have been covered by a policy of insurance issued by the insurer. Such a situation might arise, for example, if somebody was involved in an accident where they did not get the name of the driver who caused the collision, but where they provided evidence that the driver was in uniform and was driving a branded vehicle in close proximity to a depot such that an inference could be drawn by the court that, on the balance of probability, whoever was driving the vehicle must have been someone who was allowed to drive the vehicle in question for the purpose for which it was being driven at the time of the accident. In such circumstances, the 2002 Regulations will allow a claimant to get around the impossibility of serving proceedings on an unidentified driver, as was the case in Cameron v Liverpool Victoria Insurance  UKSC 6.
However, the 2002 Regulations will not be of assistance when, as in Kelec, the Claimant is unable to prove that the insurer was liable to the insured or in circumstances involving uninsured use of the vehicle, for example, if a vehicle is driven by a thief. Similarly, if the insurer is able to repudiate the claim, for example because their insured had permitted an insured driver to drive the vehicle in question (the Monk v Warbey tort) section 3 would be of no assistance to an injured claimant.
In Nemeti v Sabre Insurance Co  EWCA Civ 1555 the tortfeaser driver was Mr Bura Junior who had taken his father’s car without permission and was driving it uninsured. The Claimants’ solicitors mistakenly believed that the Respondents insured Mr Bura junior. However, they realised too late that they did not and applied to add/substitute the Estate of the deceased Mr Bura to the litigation under section 35 of the Limitation Act 1980 (the Particulars of claim had originally just brought the claim against the insurer) so that they could then apply to enforce a judgment against the insurer under section 151 of the Road Traffic Act 1988. Master Eastman allowed the Estate to be substituted in place of the insurance company, this was then reversed by HHJ Cotter QC whose decision was upheld by the court of appeal. In refusing the appeal Hallett LJ at [42-43] considered the fundamentally different nature of a claim under regulation 3 of the 2002 Regulations versus section 151 of the RTA 1988:
“Regulation 3 required certain conditions to be fulfilled. Thus, in a properly constituted claim under Regulation 3 there would have been additional assertions in the Particulars to the effect that the accident occurred in the United Kingdom and the tortfeasor was insured by the Defendant. The claim for relief would have referred to the Regulation and presumably sought payment from the Defendant ‘to the extent that (the Defendant) was liable to pay the insured tortfeasor’ as per the Regulation. The original claim was not, therefore, a claim for damages for personal injury against the Respondents, as Mr Burton insisted. It was not a claim in negligence. It was effectively a claim for an indemnity under statute (as the Claim Form made clear) limited to the Respondents’ liability to their insured.
By contrast, the new claim is a claim in negligence against the alleged tortfeasor. The claim for relief is a claim for damages for personal injury allegedly caused by that negligence. Any judgment would be against the Estate. The fact that the Appellants, if successful, may be entitled to recover payment from the Respondents of “any sum” found due, under section 151 of the 1988 Act, is beside the point for these purposes.”
Section 148 RTA 1988
However, it should be noted that section 148 of the RTA 1988 still applies to the direct right of action under regulation 3 of the 2002 Regulations2. An insurer cannot rely on any of the exclusions clauses which are rendered of no effect by the operation of section 148 of the RTA 1988. Accordingly, in Bayraz v Acromas Insurance Co Ltd  2 WLUK 193 the insurers of the tortfeasor driver submitted that they had been discharged from any liability to the driver under the policy by his breach of their policy terms by failing to cooperate (i.e. by post-accident procedural failures) and that, under regulation 3(2), they were directly liable to the claimants only to the extent that they were liable to the insured person so that they were not liable to the claimants. Recorder Andrew Lydiard QC rejected this argument advanced by the insurers and held that under regulation 3 Claimant can recover from the insurer, as he had had the same rights as the insured driver under s.148(5) RTA which provides:
“A condition in a policy or security issued or given for the purposes of this Part of this Act providing—(a) that no liability shall arise under the policy or security, or (b) that any liability so arising shall cease, in the event of some specified thing being done or omitted to be done after the happening of the event giving rise to a claim under the policy or security, shall be of no effect in connection with such liabilities as are required to be covered by a policy under section 145 of this Act.”
Insurers will only be liable for claims brought by third parties under regulation 3 of the 2002 Regulations if they would have been liable to their insured. Accordingly, Defendant insurers should ensure that the Claimant is able to prove (1) who was driving; (2) that they were permitted to use the vehicle for the use to which it was being put at the time of the accident; that the insured person complied with relevant policy terms (subject to such terms not being disallowed by the operation of section 148 of the RTA 1988). As ever close reading of the policy will pay dividend in claims which rely solely on the 2002 Regulations.
Claimants will often be wise to bring a claim under section 151 if there is any doubt as to whether the insured person’s policy would respond in the circumstances of the case. However, the 2002 Regulations should be used in circumstances where the name of the tortfeasor driver is unknown but it is possible for the court to infer that whoever was driving must have been insured to drive the vehicle.
1 See Colinvaux’s Law of Insurance at 23-233 to 2-234.
2 See Colinvaux’s Law of Insurance at 23-238, top of p. 1485.