The Court of Appeal decided that the MIB is an emanation of the state and accordingly the 2009 EU motor insurance directive was directly effective against it.
Full judgment, dated 5 June 2019.
In this claim the Appellant had been found liable to indemnify a Mr Dennis Tindale, who had injured the Respondent with his car, which he was driving without insurance in a field at the time of the accident. The Appellant defended the claim on the basis that the injuries “were not caused by or arising out of the use of the vehicle on a road or other public place under section 145 of the Road Traffic Act 1998” . The Respondent countered that even if the injuries were not so caused, EU Directive 2009/103/EC (which requires member states to take appropriate measures to ensure vehicles are covered by insurance and, if they are not, to ensure that there is a body that will compensate damage caused to others thereby) was directly effective against the Appellant, making it still liable to compensate him.
The court agreed with the Respondent, finding that the Appellant was an emanation of the state, that the directive was accordingly directly effective against it and that it was therefore liable to compensate the Respondent.
The Respondent was walking in private land in Lincolnshire when Mr Tindale, who “erroneously assumed that the [Respondent] had been up to no good in the vicinity of his farm premises” got into an uninsured vehicle and chased the Respondent and his friends down a road, along a footpath, through a barbed wire fence and into a field, where he collided with the Respondent. Mr Tindale was debarred from defending the claim and the Appellant did not dispute liability on Mr Tindale’s behalf, but rather asserted that the accident was not one which was liable to be insured against under Part VI of the Road Traffic Act 1998 and that the directive was not directly applicable against it. It was successful on the first issue, but not on the second, which it subsequently appealed to the Court of Appeal.
Flaux LJ delivered the judgment of the court. He began by setting out the reasoning of Soole J below [11-22], in which consideration of the Irish cases of Farrell v Whitty (No. 1) (Case C-356/05) and Farrell v Whitty (No. 2) (Case C-413/15) were central. The judge found that the obligation on the state was unconditional and certainly applied to vehicles on private land (see Vnuk v Zavarovalnica Triglav dd (Case C162/13)) [13-14]. He also found, following Farrell 2(which considered the status of the identical Irish body to the Appellant, the MIBI) that the intervention of such a body as the Appellant “is designed to remedy the failure of a Member State to fulfil its obligation” to ensure insurance of motor vehicles.
The judge then went on to disagree with Flaux LJ in Byrne v MIB  EWHC 1268 (QB) in relation to the test for whether the Appellant was an emanation of the state [17-21]. In Byrne Flaux J (as he then was) had approved the tripartite test set out in Foster v British Gas PLC (Case C-118/89). Soole J, however decided that following Farrell 2 the Foster conditions were not conjunctive, so that it was not necessary to establish that the Appellant was under the control of the state. Rather, the effect of the directive was to treat the Article 10 compensation bodies set up by the state as being emanations thereof for the purposes of direct effect.
Flaux LJ then explored the CJEU’s judgment in Farrell 2 in significant detail [23-37], setting out in particular detail the CJEU’s reasoning that bodies like the Appellant “can be distinguished from individuals and must be treated as comparable to the State, e either because they are legal persons governed by public law that are part of the State in the broad sense, or because they are subject to the authority or control of a public body, or because they have been required, by such a body, to perform a task in the public interest and have been given, for that purpose, such special powers” .
At paragraphs 38-61 he then set out the submissions before him, in which the sole issue was whether or not the obligation on states to ensure that vehicles used on private land was unconditional or not. The submissions give a detailed overview of this narrow area of law.
The court concluded that the UK government had failed to fulfil its Article 3 obligation to ensure use of motor vehicles on private land was covered by a scheme of insurance and its Article 10 obligation to assign responsibility for the same to a compensatory body . It decided that the UK government did not retain a discretion to delegate the residual liability to some body other than the Appellant, because the Appellant was the designated Article 10 body [63-64].
Flaux LJ rejected the submission that there was a distinction between cases where a system had not been put in place and where a system was in place but had broken down. Farrell 2 applied to failures both partial and total, because they both cause the same result, namely a gap in insurance and therefore in the protection of the victims of motor accidents “which…is the very mischief that the Motor Insurance Directives are designed to avoid” .
Accordingly the MIB was held to be an emanation of the state against whom the directive was directly effective and was therefore liable to compensate the Claimant .