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fraudulent credit hire claims

New Untraced Drivers Agreement in force after 1st March 2017

When an application needs to be made under the Agreement

If an injured person cannot identify the fault driver of another vehicle, this is the agreement which governs their rights to compensation. In many instances, this is because the accident was a classic “hit and run”; indeed the MIB have stated that 12% of accidents in which the accident was reported to the police and a person was injured were such “hit and run accidents”. (That statistic is not as significant as it would seem at first blush; the majority of relatively minor road traffic accidents are not reported to police; the reason that such accidents are reported is that the other vehicle has made off without stopping so to a certain extent it is a self-selecting criteria). No details of the fault vehicle or the driver tend to have been obtained or recorded so an injured person’s only option would be the Untraced Driver’s Agreement.

More difficulties seem to arise where the injured person either knows the identity of the vehicle but not the driver, or thinks that they know the identity of the driver. In the first instance, the first port of call is usually the insurer of the vehicle. It is a common mistake to assume that the adage that “it is the car that is insured, not the person” which governs contingent liability under the Road Traffic Act 1988 means that once a vehicle is identified, litigation against the insurance company will be successful.

The adage applies to the position where an insurer insures Mr Policyholder for his use of Car X. It does not insure his teenage son under the policy. If the teenage son drives Car X uninsured and negligently injures the Claimant, that Claimant can obtain judgment against the teenage son and pursuant to the Road Traffic Act 1988 the insurer has to satisfy that judgment in the event that it remains unsatisfied for 7 days (the insurer may thereafter have a cause of action against either its policyholder or his son but the Claimant cares little – he has his money).

However such liability is only a contingent liability to satisfy a judgment. If Car X is stolen and Mr Car-Thief crashes into Miss Claimant injuring her but unfortunately for him in the process traps himself in his vehicle and therefore is extricated in time to be arrested, the Claimant can obtain judgment against Mr Car-Thief and the insurer has to satisfy the judgment. However if Mr Car-Thief manages to abandon the vehicle and disappears before the police arrives, Miss Claimant has nobody to bring proceedings against to obtain a judgment and cannot therefore get compensation from the insurer.

Similarly if there is a hit and run but the Claimant manages to get details of the vehicle, the Claimant still has to ascertain on the balance of probabilities who was the driver of the vehicle at the time. This can prove difficult evidentially; if Mr Liar is the registered keeper of the vehicle, is the sole insured, and admits that he is the only person with access to the keys, a bare denial by him that he ever had such an accident is unlikely to be believed. If the registered keeper is one person, there are other multiple people insured on the vehicle and there is not even a partial description of the driver, it makes it very difficult for the Claimant to prove the identity of the driver. I have heard arguments that the Court can presume the registered keeper/insured was the driver; in a hit and run accident there is at least a suspicion that the fact that the driver was not the insured person is the reason for the failure to stop.

It becomes more complex when details are provided at the scene which subsequently transpire were or may have been incorrect. The Claimant often issues proceedings against the alleged driver, assuming that he will obtain judgment with relative ease as the driver has not been traced by the insurer so the claim cannot be seemingly defended, such judgment falling to be satisfied by the insurer. If doubts about the driver’s identity are successfully raised, then such judgment cannot be obtained and the Claimant cannot obtain compensation through the Courts.

Some Claimants’ representatives have sought to bypass this difficulty (and the difficulty of service upon a Defendant who cannot be traced) by issuing proceedings under the European Communities (Rights Against Insurers) Regulations 2002 directly against the insurer. This is misconceived as to succeed against the insurer the Claimant has to prove that an insured person was driving; if identity is unknown then the Claimant cannot establish liability.

 

The European Question

It has been argued by some legal representatives that the two pieces of legislation, the Road Traffic Act and the Regulations, should be read conjunctively and/or interpreted to give effect to the various European Directives that national law should ensure that victims of motor accidents are compensated, irrespective of the insurance status of the driver. I would contend that such arguments are misconceived as the very existence of the Untraced Drivers Agreement (and Uninsured Drivers Agreements) ensure that such compensation is open to such victims such that there is no need for a strangulated interpretation of such legislation to achieve such aim (and further in any event the legislation is so clear that it cannot be interpreted to give such effect).

 

The Untraced Drivers Agreement; Costs, Procedure and Limitation

There has been a traditional distrust and avoidance of proceeding under these agreements. I suspect that this is largely due to the costs provisions. These are set out in Part 4 of the Agreement and they make the fixed recoverable costs regime seem remarkably generous. The fee for a claim for under £10,000 is £450 + VAT + disbursements, rising to a heady £700 + VAT + reasonable disbursements for claims between £10,000 and £25,000. If the claim goes to an arbitrator then he is entitled to additional reasonable legal costs, with the proviso that if it would have been dealt with on the fast-track, such costs are limited to a further £500 plus £250 if the original decision of the artibtrator is not accepted and the subsequent full arbitration is by written observations and £500 if it goes to an oral hearing.

The MIB investigates the claim and can then either refuse the claim or make an offer. A refusal to accept the same or an appeal on a refusal to pay will lead to a decision by an Arbitrator which if not accepted is followed by a hearing by an Arbitrator (a Queens Counsel selected from an appointed Panel). The new agreement introduces a system of approval of a settlement for an infant or incapacitated person. The limitation periods follow the Limitation Act 1980 (three years for personal injury); whilst the previous agreement originally had a shorter limitation period (2 years) this had been subsequently amended so that the new agreement does not change the law.

As with the Uninsured Drivers Agreement, there is only a liability upon the MIB if there are no other persons to recover from. For instance a passenger in a vehicle who is injured due to 90% negligence of an unidentified driver but 10% negligence of the driver of his own insured vehicle is entitled to claim for the full amount from his own driver (and his insurer) and therefore will not be entitled to an award under this Agreement.

 

Property Damage

Property damage was originally excluded from the previous Untraced Drivers Agreement. There has been incremental amendments to this and a gradual corrosion of the principles such that it is possible to make a property damage claim (in reality, usually a claim for the vehicle) in narrow circumstances;

  • Any property damage will not be recoverable if such damage has been paid by an insurer OR that the Claimant could have made a claim for such property damage from his/her insurer;
  • There is an excess of £400 on any claim for property damage
  • (Very significantly) property damage can only be claimed in cases where any Claimant has sustained significant personal injury in respect of the same event.

I do not fully agree with the rationale of this. If an unidentified driver wipes out my vehicle insured on a third party, fire and theft basis only as it is parked outside, why should I receive the money if my husband happened to be sitting inside it at the time and suffered a whiplash injury necessitating physiotherapy, whilst if it was unattended I get nothing. In both scenarios I have lost my vehicle through no fault of my own.

For completeness, significant personal injury includes death, injury necessitating two nights in-patient hospital treatment or three sessions of out-patient treatment.

Despite considerable opposition from the MIB, persons whose vehicles were uninsured are entitled to recovery if they meet the other criteria.

 

Passengers

There is a detailed exception to the liability of the MIB for passengers travelling in the fault vehicle who knew that it was stolen or that the driver was uninsured at the time. On first blush it seems a sensible exception, mirroring that contained within the Uninsured Driver’s Agreement. It is only when one takes a step back that one realises who little it will be used. This agreement relates to “unidentified persons” (helpfully defined as persons who cannot be identified). One has to wonder how many people injured in road traffic accidents are unaware of the identity of the driver of their own vehicle at the time (albeit I suppose that it does catch people who may be refusing to reveal the name of the driver in order to shield him from potential criminal prosecution). This exception is strengthened by the fact that having placed the burden of proof on the MIB in establishing that the passenger knew the vehicle was stolen or the driver was uninsured at the time, the following clause goes on to state that the Claimant will be deemed to have such knowledge, subject to evidence to the contrary, if the MIB can establish that the Claimant was the owner or registered keeper (effectively placing the onus on the owner of a vehicle to check the insurance status of anybody he allows to drive the same, or face obtaining no compensation), or knew that the driver was disqualified from driving or was under the legal age to drive. It seems a trifle unlikely that a scenario would arise where a passenger would not know the identity of the driver of the vehicle but did know that he was disqualified from driving!

The new Agreement makes one significant change to correct what was probably misdrafting in the previous Agreements. In claims brought by dependants, contributory negligence by the deceased is taken into account in deciding whether awards should be reduced. The previous Agreements referred to “the Claimants contributory negligence” such that in cases where the Claimants were in fact the dependents, no reduction could be made for contributory negligence of the deceased. I had a case where the deceased had gone for a ride as pillion passenger on a motorcycle without a helmet and subsequently died from the injuries she sustained when thrown off. This was a case under the Uninsured Drivers Agreement which used the same wording. The dependency claim by her children could not be reduced due to her negligence in failing to wear a helmet; under the new Agreement wording it would have been. This is likely to arise in both seatbelt cases and cases where the passenger knew or ought to have known that the driver was driving with excess alcohol.

 

Other Changes

The Arbitrator now has the power to order a Claimant to contribute to the costs of the Arbitrator in certain circumstances, however the MIB cannot ask for a lower award at an arbitration hearing than they originally offered; they have to stick to the original offer. Whilst this may seem to make an appeal a no-lose scenario for an unrepresented Claimant, the first sentence of this paragraph redresses the balance.

Judy Dawson specialises in insurance indemnity questions and regularly advises and lectures the insurance industry on such matters.

 

Contact Judy’s clerks

Francine Kirk on 0113 202 8605

Talia Webster on 0113 213 5207